The Scope, Scale and Locational Preferences of Spanish Multinationals

Mainer-Casado, Carolina and Fariñas, José Carlos and Moreno, Lourdes (2018): The Scope, Scale and Locational Preferences of Spanish Multinationals.

Abstract

This paper examines the relationship between firms’ heterogeneity and their multinational activity. We examine the scope and the scale of multinational firms following the insights of Yeaple’s (2009) model. The goal of the paper is to contribute to a better understanding of the activity of Spanish multinationals using a sample of Spanish multinational firms. Our dataset is built from two databases, SABI and ORBIS, both from the Bureau van Dijk. Our results confirm that more productive firms have a greater multinational activity in terms of both the scope (the number of foreign markets where they invest) and the scale (the volume of local sales by subsidiaries in foreign markets). The structure of Spanish multinational firms’ activity is also analysed from the perspective of host country characteristics (GDP, population, distance and language) using standard gravity equations. Country characteristics that are positively associated (GDP and common language) with the volume of multinational activity are negatively related to the productivity of firms that go abroad. This asymmetry also holds for bilateral characteristics as distance that appears negatively associated with the level of multinational activity.

• Item Type: MPRA Paper
• Language: English
• Keywords: Multinational firms, heterogeneity, productivity
• Subjects: F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms ; International Business; F - International Economics > F6 - Economic Impacts of Globalization > F61 - Microeconomic Impacts; L - Industrial Organization > L6 - Industry Studies: Manufacturing; L - Industrial Organization > L8 - Industry Studies: Services

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