Re-investment and the survival of foreign-owned plants

Foreign-owned plants have higher conditional exit rates, and this paper tests the hypothesis that re-investment “embeds” these plants, leading to significantly longer survival time durations. A unique dataset is used for 265 plants that commenced in foreign ownership after 1985 in North East England, distinguishing between start-up (“greenfield”) and acquisition plants. Survival is measured at 2000, and the paper analyses the duration to the first re-investment and to survival, allowing for selection into the multiple investment state. It finds that re-investment increases the lifetime of start-up plants, but it is insignificant once selection is controlled for, while for acquisition plants there is no difference. Grants affect selection, but not the survival of plants. The paper offers little support for re-investment as a source of plant “embeddedness”.