| Abstract: |
This paper discusses the impact of foreign-ownership presence on the
productivity performance of domestically-owned British retailers. In specific,
we investigate the existence of productivity spillovers in the form of
knowledge transfer. To guide our estimations, we develop a simple Hotelling
model in which we show how the transfer of operational knowledge from MNE to
non-MNE retailers, may result to an increase in the productivity of the latter
and increased economic activity in the regions with relatively higher
concentration of foreign investment. Our empirical estimations lend support to
the assumptions upon which the theoretical model is built, while confirming
the positive and highly significant impact of these spillovers on the
productivity performance of domestic firms. More specifically, using data from
the Annual Respondent Dataset (ARD), we find that positive spillovers exist
but are mostly confined to the region in which foreign subsidiaries locate.
Furthermore, the productivity benefit from regional FDI spillovers increases
with the absorptive capacity of domestic retailers. |