Small Business Economics

, Volume 31, Issue 4, pp 395–407 | Cite as

The impact of foreign direct investment on new firm survival in the UK: evidence for static versus dynamic industries

Article

Abstract

The paper examines the impact of Foreign Direct Investment (FDI) on the survival of business start-ups. FDI has potential for both negative displacement/competition effects as well as positive knowledge spillover and linkage effects on new ventures. We find a net positive effect for the whole dataset. However, a major contribution of the paper is to outline and test an argument that this effect is likely to be comprised of a net negative effect in dynamic industries (high churn: firm entry plus exit relative to the stock of firms) alongside a net positive effect in static (low churn) industries. We find evidence to support this view. The results identify new effects of globalisation on enterprise development with associated challenges for industrial policy.

Keywords

New firms Foreign direct investment Dynamic industries 

JEL Classifications

F20 L11 L25 L26 M13 

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Copyright information

© Springer Science+Business Media, LLC 2007

Authors and Affiliations

  1. 1.Bettany Centre for Entrepreneurial Performance & EconomicsCranfield School of ManagementBedford,UK
  2. 2.University of NottinghamNottinghamUK

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