Do Multinationals Transplant Their Business Model?

69 Pages Posted: 27 Nov 2019

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 Rousova

European Central Bank (ECB)

Thierry Verdier

Paris School of Economics (PSE)

Multiple version iconThere are 2 versions of this paper

Date Written: 2019

Abstract

What determines whether or not multinational firms transplant the 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 multinational firms about transplanting the mode of organization to other countries. We test the theory with original and matched parent and affiliate data on the level of decentralization 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 organisational form to the affiliate firm in the host country: a competitive host market, the human resource policy of the multinational firm, and when an innovative technology is transferred to the host country. These factors increase the respective probabilities of organizational transfer by 7, 21, and 24 percentage points.

Keywords: organizational economics of multinational firms, trade and organisation, the theory of the firm, organizational transfer between countries

JEL Classification: D230, F120, F230, F610

Suggested Citation

Marin, Dalia and Rousova, Linda and Verdier, Thierry, Do Multinationals Transplant Their Business Model? (2019). CESifo Working Paper No. 7911. Available at SSRN: https://ssrn.com/abstract=3477724

Dalia Marin (Contact Author)

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

Ludwigstrasse 28
Munich, D-80539
Germany
+49 89 2180 2446 (Phone)
+49 89 2180 6227 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Linda Rousova

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Thierry Verdier

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

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