Multinational companies and the development of firm start-up size: evidence from quantile regressions for Ireland

This paper analyses the impact of foreign multinationals on the development of start-up size of new entrants in Irish manufacturing industries over the period 1973 to 1996. We provide a theoretical rationale as to why we would expect an effect of multinationals on entrants’ start-up size. In the empirical estimation we use the regression quantile estimator, which allows us to take account of the heterogeneity of firm start-up size. Our estimation results show that the presence of foreign multinationals in a sector impacts negatively on the start-up size of indigenous entrants. This latter effect may be attributed to competition of indigenous firms with foreign multinationals in the final goods market and/or with indigenous firms in the intermediate goods market.