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Mothers and daughters : Heterogeneity of germandirect investments in the Czech Republic

Münich, Daniel; Srholec, Martin LU ; Moritz, Michael and Schäffler, Johannes (2014) In Prague Economic Papers p.42-62
Abstract

Much has been written on the distinction between vertical and horizontal foreign direct investment. However, most of the empirical literature relies on indirect and aggregated measures only. The aim of this paper is to help fill this gap by examining the differences between German affiliates in the Czech Republic and their mother companies in Germany on the basis of direct evidence on factor requirements. Using a cluster analysis on firm-level data from the unique ReLOC survey, we identify four main groups of firms that partition the sample by broad sectoral lines and by technological, educational and skill intensity of their operations within each of them. More detailed analysis of the clustering reveals that the vertical model... (More)

Much has been written on the distinction between vertical and horizontal foreign direct investment. However, most of the empirical literature relies on indirect and aggregated measures only. The aim of this paper is to help fill this gap by examining the differences between German affiliates in the Czech Republic and their mother companies in Germany on the basis of direct evidence on factor requirements. Using a cluster analysis on firm-level data from the unique ReLOC survey, we identify four main groups of firms that partition the sample by broad sectoral lines and by technological, educational and skill intensity of their operations within each of them. More detailed analysis of the clustering reveals that the vertical model dominates in manufacturing, while the horizontal model of investment prevails in the service sector.

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author
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Cluster analysis, Czech Republic, Foreign affiliate, Germany, Multinational enterprise, Vertical investment
in
Prague Economic Papers
issue
1
pages
21 pages
publisher
University of Economics - Prague
external identifiers
  • Scopus:84920847558
ISSN
1210-0455
language
English
LU publication?
no
id
4123f337-741c-4df1-a88e-013f8aecff72
date added to LUP
2016-05-18 13:16:56
date last changed
2016-06-30 10:48:16
@misc{4123f337-741c-4df1-a88e-013f8aecff72,
  abstract     = {<p>Much has been written on the distinction between vertical and horizontal foreign direct investment. However, most of the empirical literature relies on indirect and aggregated measures only. The aim of this paper is to help fill this gap by examining the differences between German affiliates in the Czech Republic and their mother companies in Germany on the basis of direct evidence on factor requirements. Using a cluster analysis on firm-level data from the unique ReLOC survey, we identify four main groups of firms that partition the sample by broad sectoral lines and by technological, educational and skill intensity of their operations within each of them. More detailed analysis of the clustering reveals that the vertical model dominates in manufacturing, while the horizontal model of investment prevails in the service sector.</p>},
  author       = {Münich, Daniel and Srholec, Martin and Moritz, Michael and Schäffler, Johannes},
  issn         = {1210-0455},
  keyword      = {Cluster analysis,Czech Republic,Foreign affiliate,Germany,Multinational enterprise,Vertical investment},
  language     = {eng},
  number       = {1},
  pages        = {42--62},
  publisher    = {ARRAY(0xb607780)},
  series       = {Prague Economic Papers},
  title        = {Mothers and daughters : Heterogeneity of germandirect investments in the Czech Republic},
  year         = {2014},
}