Scandinavian Working Papers in Economics
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Research Institute of Industrial Economics (IFN) Working Paper Series

No 1041:
Foreign Direct Investment, Source Country Heterogeneity and Management Practices

Fredrik Heyman (), Pehr-Johan Norbäck () and Rickard Hammarberg ()

Abstract: This paper examines whether and, if so, why source country heterogeneity exists in foreign direct investments. Using detailed data on all Swedish firms for the period from 1996 to 2009, we find statistical evidence that affiliate performance differs systematically across source countries. We show that differences in foreign MNEs’ global management practices (estimated from the new firm-level data from the World Management Survey) explain about a third of the observed source country variation in productivity among foreign affiliates. We also show how different source country characteristics – through their impact on MNEs’ global management practices – affect affiliate productivity in a host country.

Keywords: Multinational firms; FDI; Management practices; Firm performance; (follow links to similar papers)

JEL-Codes: F21; F23; L10; M10; (follow links to similar papers)

72 pages, September 25, 2014, Revised February 11, 2016

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