published in: Applied Economics Quarterly, 2004, 50 (1), 89-110
This paper investigates whether the acquisition of a domestic establishment by a foreign
owner has any effects on the survival prospects and employment growth of that plant. The
analysis uses plant level data for the UK electronics and food industries for the period 1980
to 1993. We control for possible endogeneity using a matched sample of firms and
instrumental variables. Estimating a standard hazard model yields the result that foreign
takeover reduces the liftetime of the acquired plant in both the electronics and food sectors.
Estimations of the determinants of employment growth in domestic plants provide some
evidence that the incidence of takeover reduces employment growth, in particular for
unskilled labour in the electronics industry. There is no significant effect for the food sector,
however.
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