Functional Upgrading and Productivity Growth of Multinational Subsidiaries in European Transition Economies

OPEN ARCHIVE

Union Jack
Dannebrog

Functional Upgrading and Productivity Growth of Multinational Subsidiaries in European Transition Economies

Vis flere oplysninger

Titel: Functional Upgrading and Productivity Growth of Multinational Subsidiaries in European Transition Economies
Forfatter: Burger, Anže; Jindra, Björn; Kostevc, Črt; Marek, Philipp; Rojec, Matija
Resume: With economic transformation and European integration Central and Eastern European countries (CEECs) have been inserted into European and global production networks. The literature on global value chains (GVCs) suggests that firms’ performance in terms of value creation and capture crucially depends upon their ability to ‘upgrade’. Apart from product and process upgrading this refers to ‘functional upgrading’ i.e. the changing portfolio and nature of business functions executed by firms within the GVC. In principal this should hold also for multinational affiliates. They participate in GVCs through vertically integrated and specialized forms of organization. Their ability to upgrade is closely linked with their position, mandate and power asymmetries within the multinational network. Recent case study evidence documents functional upgrading in multinational subsidiaries located in CEECs. Yet, their ability to increase value capture through these processes has been contested. This paper tests the relationship between functional upgrading and productivity growth of multinational subsidiaries. We exploit a unique firm level dataset that matches state-of-the-art survey-based business function indicators with times-series accounting data for a representative sample of multinational subsidiaries in selected CEECs. The estimation results indicate that functional upgrading has a positive effect on foreign subsidiaries’ average productivity growth. The effect is higher for subsidiaries with more recent entries of foreign investors. This finding is robust to different measures for functional upgrading. The positive effect of functional upgrading seems to be mainly confined to foreign subsidiaries in manufacturing industries.
URI: http://hdl.handle.net/10398/9228
Dato: 2015-11-30
Note: This project has received funding from the European Union’s Seventh Framework Programme for research, technological development and demonstration under grant agreement no 290657.

Creative Commons License This work is licensed under a Creative Commons License.

Filer Størrelse Format Vis
Functional Upgr ... n Transition Economies.pdf 115.3Kb PDF Vis/Åbn Working paper

Dette dokument findes i følgende samling(er)

Vis flere oplysninger