Six Empirical Essays on Firm Performance and Internationalization (Foreign Direct Investment and Trade)

Abstract

This thesis theoretically and empirically explores firm performance mostly when firms conduct international operation by linking internal, external, direct, and indirect factors, including five-country components including human capital, institution, market competition, cluster development, and market size, export behaviors based on productivity cut-off, horizontal, backward and forward FDI agglomerations, the dynamic effect between FDI and trade, financial constraints in R&D investment, and the “black box” of firm efficiency. This thesis consists of six core chapters (Chapter 2-7) related to micro and macro studies. The study samples used in this thesis include the cross-sectional data obtained from 234 previous empirical studies in terms of firm performance and internationalization during the period 1969-2017 in Chapter 2, the panel data of 208,424 Chinese firms during the period 2005- 2007 in Chapter 3, the panel data of 12,240 Chinese firms during the period 2010-2013 in Chapter 4, the panel data of China’s 151 target countries during the 2007-2017 period in Chapter 5, the panel data of 414 British manufacturing firms during the period 2009-2018 in Chapter 6, and the panel data of 123 British listed manufacturing firms during the period 2006-2018 in Chapter 7. Due to the different study purposes in the six chapters, the study III data used in this study are from various data resources and different timelines. Even if this study uses the same database, such as China’s Annual Industry Survey Database in Chapter 3 and Chapter 4, this study also uses a different timeline because of the non-availability of data for a consistent panel of firms. Furthermore, the analytic methods correspondingly used in this thesis mainly involve the comparative MAR with VWLS, Heckman two-stage procedure with Probit and Tobit models, analytical method of ROC, spatial econometric model, global PCA and system GMM, heterogeneity SFA with one stage, and two-stage (DEA and Tobit) model and three-stage (DEA-SFA) model. There are multiple insight findings in this thesis. In Chapter 2, the five-country components, including human capital, institution, market competition, cluster development, and market size, substantially mediate the I-P relationship. Furthermore, the five-country components exert a positive mediating effect on the I-P relationship in developed countries while negatively mediating the I-P relationship in developing countries. In Chapter 3, productivity is likely to impact on firm’s export propensity and irregular export positively. In contrast, it negatively affects the firm’s export intensity and does not impact the firm’s regular export. Enhancing productivity cut-off is not conducive to the firm’s export propensity and regular export while it does not affect the firm’s export intensity and irregular export. Productivity cut-off tends to impact on firm’s export decision rather than its export scale. Moreover, firms with regular export are more sensitive to productivity cut-off than firms with irregular export. In Chapter 4, the congestion effect (inverted U-shaped relationship) dominates the three types of FDI agglomerations on the local firm's productivity. The congestion effect also dominates the spatial backward and forward FDI agglomerations on neighboring firms’ productivity, while a U-shaped relationship dominates the spatial horizontal FDI agglomeration on neighboring firms’ productivity. Furthermore, the interaction intensity of backward and forward FDI agglomerations with local and neighboring firms is similar and much stronger than horizontal FDI agglomeration. In Chapter 5, China is more likely to conduct horizontal FDI in developed countries, while vertical FDI in developing countries. There is a dynamic change from the substitution effect of FDI on export to the complementary effect of FDI on export along with the decreasing trend of horizontal motivation and the increasing trend of vertical motivation. In Chapter 6, the firm’s financial constraints in R&D have a vital impact on its productivity and future financing uncertainty and show a difference in low, middle, and high-tech industries. Furthermore, the loss of firm productivity is about 20% due to its financial constraints in IV R&D investment. In Chapter 7, the firm’s technical, pure technical, and scale efficiencies reach a relatively high level (between 0.93 and 1) while its operational efficiency (between 0.65 and 0.7) and profitability efficiency (between 0.85 and 0.9) have a large room to improve. Moreover, the overall environment has a significant impact on firm efficiency in middle and high-tech industries than that in the low-tech sector. Therefore, the various findings in the six core chapters provide important implications for government policies and firm’s domestic and foreign operations

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ORCID for Tapas Mishra: orcid.org/0000-0002-6902-2326

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