Why foreign-owned firms are different: A conceptual framework and empirical evidence for Austria

This study examines performance gaps among foreign-owned and domestically- owned Austrian firms. In line with earlier findings our results suggest that the positive effects of participating in a foreign multinational's network can mainly be found in productivity and profitability. A further distinction between purely national firms and multinational enterprises (MNEs) reveals that both gaps derive from gains of MNE networks rather than from ownership per se. Regardless of ownership, MNEs are more similar than MNEs and purely national firms. Gaps concerning the investment propensity and growth are primarily explained by firm characteristics rather than foreign ownership. There is no evidence of an additional bonus resulting from closer cultural proximity of German-owned firms.