The role of production technology for productivity spillovers from multinationals: Firm-level evidence for Hungary

This paper analyses the potential for productivity spillovers from inward foreign direct investment using administrative panel data on firms for Hungary. We hypothesise that the potential for spillovers is related to observable characteristics of the production process of foreign affiliates, and evaluate this empirically. We further explore the role of competition in explaining productivity spillovers within industries. Our empirical analysis yields a number of important findings. First, we show that the potential for spillovers is importantly related to the production technology of the sectors and foreign affiliates. Firms that relocate labour-intensive activities to Hungary to exploit differences in labour costs are unlikely to generate productivity spillovers, while spillovers increase in the capital intensity of foreign affiliates. Second, we find that spillovers differ markedly in the early and later stages of transition, and that there are differences between small and large firms. Furthermore, foreign presence tends to affect the productivity of domestic firms negatively whenever MNEs produce for the domestic market

Centralization of strategic decisions during the Great Recession

This study analyzes which types of firm - level shocks were associated with the centralization of strategic decision - making during the recession of 2008 - 09. We use a unique survey dataset of more than 14000 manufacturing firms from seven European countries which includes direct information on whether the firms centralized or decentralized their strategic decision - making process. Motivated by theoretical approaches claiming that organizations under considerable stress are more likely to centralize, we use multinomial logit models to test whether firms facing a larger fall in turnover, employment, investment or having to postpone their innovations were more likely to change their decision - making process. We find evidence that employment change and po stponing innovations are indeed associated with centralization even when we control for ownership, group structure, financing, management, and strategy