FDI and Heterogeneous Performance of European Enterprises

This paper investigates the link between internationalization and performance in Europe. It takes a microeconomic perspective and studies how Foreign Direct Investment (FDI) experience relates with European firms’ economic, innovation and financial performance. Drawing on a large longitudinal database, our multinomial logit estimates suggest that FDI really matters. Indeed, firms experiencing some FDI (either inward, outward or both) enjoy a superior performance compared with purely domestic enterprises. Moreover, within the class of FDI players, firms engaged in inward and outward FDI turn out to be better than those engaged only in outward FDI, which are better than those engaged only in inward FDI. These results are robust to several performance measures and alternative specifications including firm, industry and country controls.