Économie et Statistique n° 435-436 - Internationalization of French Business Firms
Performance of French Firms Operating Abroad
This article assesses the performance of French multinational manufacturing firms and compares it with the performance of exporting firms located only in France. Incentives to locate abroad (offered by importing countries) prove very significant and largely exceed export subsidies-irrespective of firm size, economic conditions, and economic sector. We observe this ranking in all points of the conditional distribution of each variable using a quantile regression. Moreover, incentives to locate abroad increase with the number of foreign subsidiaries and are more significant for subsidiaries of enterprise groups (particularly of foreign-owned groups). The better performance of French firms located abroad is partly due to a selection effect. Investing abroad entails heavy fixed costs and requires relatively high productivity. However, firms investing abroad for the first time also register robust growth in sales, value added, workforce, and exports ex post. Setting up operations abroad thus rewards the top performers, which consolidate their advantage over other firms. This finding seems particularly valid for group subsidiaries, which are characterized both by a selection effect and greater learning effects.