Nature and Determinants of Productivity Growth of Foreign Subsidiaries in Central and East European Countries

Posted: 1 Oct 2009

See all articles by Boris Majcen

Boris Majcen

Institute for Economic Research - Slovenia

Slavo Radosevic

University College London - School of Slavonic and East European Studies

Matija Rojec

University of Ljubljana - Faculty of Social Sciences

Abstract

The paper examines the determinants of productivity growth in foreign manufacturing subsidiaries in five Central and East European (CEE) countries by analysing patterns of control, nature of firms’ capabilities and firms’ market orientations. Building on the so-called ‘subsidiary development’ perspective, we show that productivity growth is determined jointly by corporate governance, production capability and market orientation variables. Within a dominantly production-oriented mandate, CEE subsidiaries have a relatively high level of autonomy in the control of their business functions. Majority foreign equity shareholding has a significant and positive impact on subsidiaries’ productivity growth. Our results show strong regional characteristics.

Keywords: Foreign subsidiaries, Productivity, Central and Eastern Europe

JEL Classification: D20, F23, L20

Suggested Citation

Majcen, Boris and Radosevic, Slavo and Rojec, Matija, Nature and Determinants of Productivity Growth of Foreign Subsidiaries in Central and East European Countries. Economic Systems, Vol. 33, No. 2, 2009, Available at SSRN: https://ssrn.com/abstract=1480520

Boris Majcen

Institute for Economic Research - Slovenia ( email )

Kardeljeva ploscad 17
Ljubljana, 1000
Slovenia

Slavo Radosevic (Contact Author)

University College London - School of Slavonic and East European Studies ( email )

Malet Street
London WC1E 7HU
United Kingdom

Matija Rojec

University of Ljubljana - Faculty of Social Sciences ( email )

Kardeljeva ploscad 5
Ljubljana, 1000
Slovenia

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