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

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: College of Business and Social Sciences > Aston Business School > Economics, Finance & Entrepreneurship
College of Business and Social Sciences > Aston Business School
College of Business and Social Sciences > Aston Business School > Centre for Personal Financial Wellbeing
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
Publication ISSN: 1573-0913
Last Modified: 01 Apr 2024 07:16
Date Deposited: 23 Sep 2016 07:11
Full Text Link:
Related URLs: http://www.scop ... tnerID=8YFLogxK (Scopus URL)
PURE Output Type: Article
Published Date: 2017-03
Published Online Date: 2016-08-30
Accepted Date: 2016-07-23
Authors: Danakol, Seçil Hülya (ORCID Profile 0000-0002-6670-0427)
Estrin, Saul
Reynolds, Paul (ORCID Profile 0000-0003-4383-8690)
Weitzel, Utz

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