Do Multinationals Transplant Their Business Model?

59 Pages Posted: 6 Jun 2013

See all articles by Dalia Marin

Dalia Marin

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

Linda Fache Rousová

European Central Bank (ECB)

Thierry Verdier

Paris School of Economics (PSE); Pontifical Catholic University of Rio de Janeiro (PUC-Rio) - Department of Economics; Centre for Economic Policy Research (CEPR)

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Date Written: June 2013

Abstract

What determines whether or not multinational firms transplant their mode of organisation to other countries? We embed the theory of knowledge hierarchies in an industry equilibrium model of monopolistic competition to examine how the economic environment may affect the decision of a multinational firm about transplanting its business organisation to other countries. We test the theory with original and matched parent and affiliate data on the internal organisation of 660 Austrian and German multinational firms and 2200 of their affiliate firms in Eastern Europe. We find that three factors stand out in promoting the multinational firm’s decision to transplant the business model to the affiliate firm in the host country: a competitive host market, the corporate culture of the multinational firm, and when an innovative technology is transferred to the host country. These factors increase the respective probabilities of organisational transfer by 18.5 percentage points, 37, and 31 percentage points.

Keywords: organisational economics of multinational firms, organisational transfer between countries, the theory of the firm, trade and organisations

JEL Classification: D23, F12, F23, F61

Suggested Citation

Marin, Dalia and Fache Rousová, Linda and Verdier, Thierry, Do Multinationals Transplant Their Business Model? (June 2013). CEPR Discussion Paper No. DP9500, Available at SSRN: https://ssrn.com/abstract=2275153

Dalia Marin (Contact Author)

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics ( email )

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CESifo (Center for Economic Studies and Ifo Institute)

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Centre for Economic Policy Research (CEPR) ( email )

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Linda Fache Rousová

European Central Bank (ECB) ( email )

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Germany

Thierry Verdier

Paris School of Economics (PSE) ( email )

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Pontifical Catholic University of Rio de Janeiro (PUC-Rio) - Department of Economics ( email )

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Rio de Janeiro, RJ 22453
Brazil

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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