Introduction

There is considerable diversity in the type and intensity of turnover both across and within industries. On the one hand, the rates of entry, exit, and continuing-firm displacement differ across industries. On the other hand, there is considerable heterogeneity within industries; firms are not subject to the same uncertainties. Age and size are two characteristics that have been shown in previous chapters to affect the performance of different firms within industries. This chapter examines whether the nationality of a firm also differentiates firms and affects intra-industry firm performance.

Foreign-controlled firms are seen to embody a different form of organization than are domestic-controlled firms, to be able to coordinate larger operations, to possess superior technologies, to access strategic sources of raw materials more efficiently (Rugman, 1980). As a result, there are substantial differences between the plants of domestic-controlled and foreign-controlled firms in the Canadian manufacturing sector. The parents of foreign-owned plants were more diversified across industries (Table 11–1). Within each industry, the foreign-owned plants were more specialized. Combined with their larger average size, the greater degree of specialization in foreign plants meant that their production runs were longer and economies of scale in product lines easier to exploit. Concomitantly, foreign-owned plants had higher labour productivity and higher remuneration rates. While the salary paid to non-production workers was much the same in the two populations, foreignowned plants employed a larger proportion of their work-force in higher-paid white-collar jobs, since a larger proportion of their total work-force was classified as non-production workers.

These differences indicate that foreign and domestic firms are drawn from different populations.