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Growing lemons and cherries? Pre- and post-acquisition performance of foreign-acquired firms in new EU member states

Published on Apr 1, 2015in The World Economy1.09
· DOI :10.1111/twec.12176
Jože P. Damijan18
Estimated H-index: 18
(Katholieke Universiteit Leuven),
Črt Kostevc11
Estimated H-index: 11
(University of Ljubljana),
Matija Rojec16
Estimated H-index: 16
(University of Ljubljana)
Abstract
Foreign acquisitions are an increasingly important mode of FDI in the new EU member states (NMS). Using ?rm-level data and a common estimation framework for seven NMS we study pre-and post-acquisition performance of acquired ?rms. We ?nd that selection criteria of target ?rms di¤er signi?cantly across countries. In some countries the evidence supports the idea of ?cherry picking? with better ?rms being chosen as targets for acquisition, while in the others ?lemons?with growth potential tend to get selected. Regardless of whether ?cherries?or ?lemons?are targeted, performance of acquired ?rms improved after the acquisition, whereby the boost in productivity has not been achieved by a reduction in employment, as it even increased, but rather by increased e¢ ciency in the use of labor and especially capital. Additionaly, foreign ownership is found to yield biggest rewards to small less productive ?rms.
  • References (67)
  • Citations (11)
References67
Newest
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#2Iulia Traistaru-Siedschlag (Economic and Social Research Institute)H-Index: 14
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#2Fredrik Sj (Research Institute of Industrial Economics)H-Index: 20
Last.Jing Sun (Skidmore College)H-Index: 1
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Cited By11
Newest
#1Marc Schiffbauer (World Bank)H-Index: 2
#2Iulia Traistaru-Siedschlag (Economic and Social Research Institute)H-Index: 14
Last.Frances Ruane (Economic and Social Research Institute)H-Index: 21
view all 3 authors...
#1Davide Castellani (University of Perugia)H-Index: 21
#2Maria Luisa Mancusi (CUA: The Catholic University of America)H-Index: 11
Last.Antonello Zanfei (University of Urbino)H-Index: 20
view all 4 authors...
#1Jože P. Damijan (University of Ljubljana)H-Index: 18
#2Stefaan Decramer (Katholieke Universiteit Leuven)H-Index: 3
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