DP9500 Do Multinationals Transplant their Business Model?
What determines whether or not multinational firms transplant their mode of organisation to other countries? We embed the theory of knowledge hierarchies in an industry equilibrium model of monopolistic competition to examine how the economic environment may affect the decision to transplant the business organization. We test the theory with original data of 660 multinational firms and 2200 of their affiliates. Three factors stand out: a competitive host market, the corporate culture of the multinational firm, and the transfer of an innovative technology. These factors increase the respective probabilities of organisational transfer by 9, 18, and 27 percentage points.