Multinationals Productivity Advantage: Scale or Technology?

13 Pages Posted: 10 Mar 2007

See all articles by Sourafel Girma

Sourafel Girma

Nottingham University Business School

Holger Görg

University of Kiel; Kiel Institute for the World Economy


This study decomposes the productivity advantage of foreign multinationals into a technology and a scale effect and analyses the causal relationship between foreign ownership and these two components. This is done by analyzing the effects of an acquisition of a domestic establishment by a foreign multinational, using a combined propensity score matching and difference-in-differences estimation. The main results show that any positive impact of acquisition is predominantly due to changes in technical efficiency and not in scale and that the preacquisition productivity of the target plays a role in mediating the rate of technology transfer from the multinational.

Suggested Citation

Girma, Sourafel and Gorg, Holger, Multinationals Productivity Advantage: Scale or Technology?. Economic Inquiry, Vol. 45, No. 2, pp. 350-362, April 2007. Available at SSRN: or

Sourafel Girma (Contact Author)

Nottingham University Business School ( email )

Jubilee Campus
Nottingham, NG8 1BB
United Kingdom
+44 0 115 8466656 (Phone)


Holger Gorg

University of Kiel ( email )

Olshausenstr. 40
D-24118 Kiel, Schleswig-Holstein 24118

Kiel Institute for the World Economy ( email )

P.O. Box 4309
Kiel, Schleswig-Hosltein D-24100

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