Domestic and foreign companies in Greek manufacturing sector: comparative performance analysis multinationalism and firm growth

Abstract

This paper concerns a comparative performance analysis of Greek and foreign (multinational) firms in Greek manufacturing sector regarding evolution of market shares, profitability and firms growth. For the analysis have been used data from balance sheets of two different group of companies (greek and foreign). In the two groups are included the most important manufacturing firms as it regards their size and market power. The comparison of the evolution of market shares for the period 1988-1994 indicates that foreign companies even though are the minority in each branch they dominate the branches were they activate in terms of market share. This happens because they possess some firm-specific advantages over their domestic
competitors and is in accordance to the multinationals' (MNEs) theory. Against the traditional MNEs theory though, is the profitability issue since the analysis by branch (using regression methods) and the analysis for the manufacturing sector as a whole (using Analysis of Variance methods) showed that foreign firms are not more profitable than their domestic competitors and that ownership (domestic or foreign origin of the firm) does not affect firm's profitability (even though the theory asserts the opposite argument). This could happen because MNEs use other methods to transfer their profits abroad (e.g. transfer pricing
is a most favourite strategy for profit remittance). Against traditional MNEs theory are also the results from firm's growth analysis since it was proved that ownership does not affect firms rate of growth, so the MNEs does not possess any advantage to grow faster than non-MNEs as theory states.   JEL Classification: F21, F23, L1