Foreign direct investment via M&A and domestic entrepreneurship:blessing or curse?

Danakol, Seçil Hülya, Estrin, Saul, Reynolds, Paul and Weitzel, Utz (2016). Foreign direct investment via M&A and domestic entrepreneurship:blessing or curse? Small Business Economics, 48 (3), 599–612.

Abstract

There are conflicting predictions in the literature about the relationship between FDI and entrepreneurship. This paper explores how foreign direct investment (FDI) inflows, measured by lagged cross-border mergers and acquisitions (M&A), affect entrepreneurial entry in the host economy. We have constructed a micro-panel of more than two thousand individuals in each of seventy countries, 2000–2009, linked to FDI by matching sectors. We find the relationship between FDI inflows and domestic entrepreneurship to be negative across all economies. This negative effect is much more pronounced in developed than developing economies and is also identified within industries, notably in manufacturing. Policies to encourage FDI via M&A need to consider how to counteract the prevailing adverse effect on domestic entrepreneurship.

Publication DOI: https://doi.org/10.1007/s11187-016-9792-z
Divisions: Aston Business School > Economics, Finance & Entrepreneurship
Aston Business School
Additional Information: The final publication is available at Springer via http://dx.doi.org/10.1007/s11187-016-9792-z Supplementary data available on the journal website.
Uncontrolled Keywords: entrepreneurship,foreign direct investment,new firm entry,spillovers,Business, Management and Accounting(all),Economics and Econometrics
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Related URLs: http://www.scop ... tnerID=8YFLogxK (Scopus URL)
Published Online Date: 2016-08-30
Authors: Danakol, Seçil Hülya
Estrin, Saul
Reynolds, Paul ( 0000-0003-4383-8690)
Weitzel, Utz

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