The role of foreign-owned entities in building economic resilience in times of crisis: The case of European digital and technologically-intensive firms during the Covid-19 pandemic

• Authors: Stanisław Umiński , Jarosław M. Nazarczuk , Aleksandra Borowicz

Abstracts

EN

Research background: Over the decades, foreign-owned entities (FOEs) have become an important part of the economic landscape considered as behemoths of globalisation, but also transmitters of positive effects such as technology or know-how spillovers. In times of volatility and uncertainty, firms’ contribution to building a resilient economy is at the top of the public agenda. Purpose of the article: The purpose of the article is two-fold. Firstly, we test, how FOEs perform in this stressful time of volatility and uncertainty. Secondly, we examine the contribution to resilience by digital and technologically intensive sectors.  Methods: The study utilises the Bureau van Dijk (BvD) Orbis firm-level database as a primary data source. The results are derived with the use of two econometric approaches. Firstly, we estimate a static model utilising the ordinary squares estimator. Secondly, we re-estimate the equations using a two-step System GMM estimator. It introduces a lagged dependent variable into the model and implements a correction for endogeneity among covariates by including instruments (in levels and differences). Findings & value added: We use size, age, ownership, gearing, and intangibility as firms’ financial performance determinants, together with the sector-, country- and time-fixed effects. FOEs compared to domestic ones generated a higher revenue growth rate. In times of crisis high-tech and digital firms are more resilient. However, ownership does not matter in this respect. We contribute to the discussion about functions performed by FOEs in crisis and turbulent times, in which resilience issues are on top of the agenda. Our research intends to bridge the gap between the performance of FOEs, micro-level analysis, and resilience.

Keywords

EN

foreign direct investments; pandemic; technological intensity; resilience; corporate performance

• Publisher: Instytut Badań Gospodarczych
• Journal: Equilibrium. Quarterly Journal of Economics and Economic Policy
• Year: 2023
• Volume: 18
• Issue: 3
• Pages: 751-777

Dates

published

2023

Contributors

author

Stanisław Umiński

• University of Gdańsk

• https://orcid.org/0000000244450893

author

Jarosław M. Nazarczuk

• University of Warmia and Mazury in Olsztyn

• https://orcid.org/0000000223186333

author

Aleksandra Borowicz

• University of Gdańsk

• https://orcid.org/0000000161837902

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Identifiers

DOI

10.24136/eq.2023.024

Biblioteka Nauki

22392135