Closure within multi-plant firms: evidence from Japan

• Published in: Review of world economics Vol. 148; no. 4; pp. 647 - 668
• Main Authors: Kneller, Richard, McGowan, Danny, Inui, Tomohiko, Matsuura, Toshiyuki
• Format: Journal Article
• Language: English
• Published: Berlin/Heidelberg Springer 01-12-2012; Springer-Verlag; Springer Nature B.V
• Subjects: Aquatic plants; Capital; Data analysis; Economic models; Economic Policy; Economic statistics; Economic theory; Economics; Economics and Finance; Empirical evidence; European Integration; Evidence; Global economy; Herbivores; Imports; Industrial plants; Industrial production; Industrial productivity; International business enterprises; International Economics; International finance; Japan; Macroeconomics/Monetary Economics//Financial Economics; Multinational corporations; Multinational enterprises; Original Paper; Plant closings; Probability theory; Productivity; Ratios; Shutdowns; Studies; Sunk costs; Wages; Japan; D21; Plant exit; F23; Multinational firms; D24; L6; F15; L20; Multi-plant firms
• ISSN: 1610-2878; 1610-2886
• DOI: 10.1007/s10290-012-0135-0

In the literature there is substantial evidence that a plant is more likely to be closed down if it is owned by a firm with other plants or is owned by a multinational enterprise (MNE). But does ownership or multi-plant status matter for which plants are closed? Using Japanese data we study plant closure by multi-plant MNEs and non-MNEs. We show that both organisational forms raise the probability of plant exit and that plants that are relatively small and capital unintensive relative to the rest of the firm are significantly more likely to exit.