The foreign business and domestic enterprise relationship: its implications for local entrepreneurial resilience

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Thompson, P. ORCID: 0000-0003-1961-7441 and Zang, W. ORCID: 0000-0002-0522-8739, 2018. The foreign business and domestic enterprise relationship: its implications for local entrepreneurial resilience. Local Economy, 33 (1), pp. 10-39. ISSN 0269-0942

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Official URL: http://doi.org/10.1177/0269094218756817

Abstract

Both domestic SMEs and FDI are often seen as key parts in helping economies to withstand and recover from shocks. What is less clear is the impact that a greater presence of foreign owned firms has on domestic enterprises' ability to withstand such shocks and for entrepreneurial activity to renew itself after economic shocks, described as local entrepreneurial resilience. To examine how foreign influence affects local entrepreneurial resilience rather than considering the relationship between foreign influence and domestic firm births or deaths at a given point in time, this study takes a more dynamic perspective. The relationship between foreign influence and the change in local firm births, deaths, and their overall impact in terms of net births and business churn, after the financial crisis is examined. UK data is examined at the local level to account for the within region heterogeneity of foreign investments that will lead to quite different outcomes being found for domestic enterprises in the same regions. The results indicate that those areas with greater foreign business influence in the labour market are likely to have seen firm birth rates remain higher and recover more quickly. There are policy implications for localities with both higher and lower levels of foreign business ownership.

Item Type:

Journal article

Publication Title:

Local Economy

Creators:

Thompson, P. and Zang, W.

Publisher:

Sage for the Local Economy Policy Unit

Date:

2018

Volume:

Number: