The Performance of Foreign Affiliates in German Manufacturing: Evidence from a new Database

This study presents the first investigation into the performance of foreign‐controlled enterprises in German manufacturing based on new micro‐data from official statistics. A comprehensive set of performance variables was examined not only by comparing unconditional mean values but also by accounting for other determinants and differences across distributions. The analysis revealed a foreign ownership performance premium with regard to productivity, R&D and export intensities, and average wages. Only profitability did not seem to differ from German‐owned enterprises. Results were verified by varying comparison groups of indigenous firms and separating for high‐ and low‐tech sectors. Furthermore, a breakdown by country of origin and type of ownership showed considerable heterogeneity of foreign‐controlled affiliates in Germany.