Essays on entrepreneurship, worker mobility and firm performance

The dissertation contains four empirical studies. The first chapter studies the effect of foreign direct investment (FDI) on entrepreneurship. The analysis suggests that FDI reduces entrepreneurship, especially in the short run but even in the longer run. At the same time, FDI decreases competition and increases wage levels, which then impact entry positively and negatively, respectively. The combined effect of FDI is to reduce firm creation, although the impact is small and virtually disappears after one year. The focal point of the second and third chapter is on productivity spillovers via labor mobility. Chapter two documents that domestic manufacturing firms that hired new workers from multinationals experience a productivity gain one year after hiring. This productivity enhancing effect of hiring from multinationals reflects the level of education and skills of the newly hired employees. Chapter three finds that hiring from more productive firms yields productivity gains. Worker mobility within the same sector is associated with more diffusion of knowledge and skills which generate productivity gains, compared to worker mobility across sectors. The final chapter focuses on the impact of government involvement on firm performance using a panel data set of publicly traded Chinese enterprises. The analysis shows that Chinese government-controlled firms (either central or local government) underperformed compared to non-government-controlled firms (‘grabbing hand´ theory). However, firms with a poor financial performance benefit from government control, which supports the ‘supporting hand´ theory of the government.