Foreign business ownership and domestic entrepreneurial exports

Abstract

Purpose

There has been considerable debate about the impact that Foreign Direct Investment has upon home grown enterprise (Pathak et al., 2015). The purpose of this paper is to examine how foreign business ownership at the local level affects the decision of individual UK entrepreneurs to export their production.

Design/methodology/approach

The Global Entrepreneurship Monitor data and ONS foreign firm employment data are used within this study. In order to control for entrepreneurial and firm characteristics, a multivariate approach is adopted with logit, ordered logit and multinominal logit regressions utilised.

Findings

It is found that the influence of foreign firms, as captured by their share of local employment, has a negative influence on domestic entrepreneurs’ probability of exporting, but has no significant effect on the intensity of these export activities.

Research limitations/implications

The results suggest that local economies may not only become highly reliant on foreign employers, but also on local demand for domestic production. This means actions might be required to reduce this over-reliance to ensure the development of resilient local economies.

Originality/value

Unlike many other studies the relationship between the SME exports and foreign influence is considered at a local level. With the current UK government seeking to increase UK firms’ exports substantially, understanding this relationship is of key importance to policy makers.

Citation

Thompson, P. and Zang, W. (2016), "Foreign business ownership and domestic entrepreneurial exports", Journal of Small Business and Enterprise Development, Vol. 23 No. 3, pp. 873-895. https://doi.org/10.1108/JSBED-10-2015-0138