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Sectoral determinants of foreign affiliate sales employing European data
Author(s) -
Bekkers Eddy,
Macskasi Indre
Publication year - 2017
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/roie.12286
Subject(s) - assertion , negative binomial distribution , sign (mathematics) , poisson distribution , econometrics , test (biology) , estimator , statistical hypothesis testing , economics , alternative hypothesis , business , statistics , mathematics , null hypothesis , computer science , mathematical analysis , paleontology , biology , programming language
We test theories on sectoral determinants of foreign affiliate sales employing European foreign affiliate sales statistics (FATS). On the one hand, we test hypotheses that foreign affiliate sales are less likely in sectors with complex tasks and more likely in sectors where communication with customers is important. On the other hand, we test the hypothesis that the force of gravity is stronger in more complex sectors. Employing Poisson and negative binomial estimators, we find support for the first hypotheses and contradict the second hypothesis. We show that the interaction effect between distance and complexity changes sign from negative to positive when complexity is included as a separate regressor. We propose an explanation to reconcile our findings with the basic assertion in the second hypothesis that the force of gravity is stronger in more complex sectors, based on a composition effect between horizontal and vertical affiliate sales.