Core Product Competence and Productivity Gains: The Role of Foreign Ownership

Mei, J. 2023. Core Product Competence and Productivity Gains: The Role of Foreign Ownership. International Review of Applied Economics . 37 (3), pp. 389-425. https://doi.org/10.1080/02692171.2023.2210513

TitleCore Product Competence and Productivity Gains: The Role of Foreign Ownership
TypeJournal article
AuthorsMei, J.
Abstract

Recent theoretical contributions provide predictions about the effects of core product competence on firms’ productivity. However, we know little about the influence of foreign ownership on core product competence that might also lead to productivity gains across firms. This paper uses firm-level data for 137 countries to investigate how foreign ownership affects firms’ decision to become specialised at core products and the subsequently firm productivity gains. To tackle the possible endogeneity of foreign ownership, the instrumental variable approach and the propensity score matching technique are employed. The results show that foreign ownership has a positive and significant effect on firms’ core product competence and this positive effect leads to produc-tivity gains, especially for the most productive firms. We further reveal that foreign competition within an industry encourages firms to become specialised at core products, which could further lead to productivity gains across firms.

KeywordsForeign ownership
Core product competence
Productivity gains
JournalInternational Review of Applied Economics
Journal citation37 (3), pp. 389-425
ISSN0269-2171
1465-3486
Year2023
PublisherTaylor & Francis
Publisher's version
License
CC BY 4.0
File Access Level
Open (open metadata and files)
Digital Object Identifier (DOI)https://doi.org/10.1080/02692171.2023.2210513
Publication dates
Published online18 May 2023

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