Authors :
Alfian Musyafa
Volume/Issue :
Volume 7 - 2022, Issue 3 - March
Google Scholar :
https://bit.ly/3IIfn9N
Scribd :
https://bit.ly/35Jzk2y
DOI :
https://doi.org/10.5281/zenodo.6414608
Abstract :
The globalization of markets and rising
international trade have led to a dramatic increase in
the international expansion of multinationals. In the
process of internationalizing, multinational
enterprises (MNEs)carry with them firm-specific
advantages which allows them to attain higher
productivity levels compared to domestic firms.
Under its regional grouping, Association of Southeast
Asian Nation (ASEAN), Southeast Asia is particularly
interesting for the study of productivity differentials
between domestic and foreign-owned firms. This is
because there is still a lack of empirical evidence in
the region and that in several ASEAN countries, there
has been a recent trend of de-industrialization where
the composition of GDP shift from manufacturing to
service. The purpose of this paper is to explore
whether foreign-owned ASEAN manufacturing firms
experience higher productivity than their domestic
counterparts. Additionally, it will also investigate how
the relationship between foreign ownership and
productivity is moderated by the firm’s absorptive
capacity. By applying a random-effect regression on a
panel dataset consisting of 688 firms from Indonesia,
Malaysia, and Vietnam covering the 2014-2018
period; this study provides partial support for the
existence of productivity differentials between
foreign-owned and domestic-owned firms in Southeast
Asia and found that absorptive capacity negatively
moderates this relationship. However, due to a lack of
internal validity, the latter finding must be
interpreted with caution.
Keywords :
ASEAN, foreign ownership, absorptive capacity, productivity.
The globalization of markets and rising
international trade have led to a dramatic increase in
the international expansion of multinationals. In the
process of internationalizing, multinational
enterprises (MNEs)carry with them firm-specific
advantages which allows them to attain higher
productivity levels compared to domestic firms.
Under its regional grouping, Association of Southeast
Asian Nation (ASEAN), Southeast Asia is particularly
interesting for the study of productivity differentials
between domestic and foreign-owned firms. This is
because there is still a lack of empirical evidence in
the region and that in several ASEAN countries, there
has been a recent trend of de-industrialization where
the composition of GDP shift from manufacturing to
service. The purpose of this paper is to explore
whether foreign-owned ASEAN manufacturing firms
experience higher productivity than their domestic
counterparts. Additionally, it will also investigate how
the relationship between foreign ownership and
productivity is moderated by the firm’s absorptive
capacity. By applying a random-effect regression on a
panel dataset consisting of 688 firms from Indonesia,
Malaysia, and Vietnam covering the 2014-2018
period; this study provides partial support for the
existence of productivity differentials between
foreign-owned and domestic-owned firms in Southeast
Asia and found that absorptive capacity negatively
moderates this relationship. However, due to a lack of
internal validity, the latter finding must be
interpreted with caution.
Keywords :
ASEAN, foreign ownership, absorptive capacity, productivity.
