Firm Heterogeneity and Performance in a Turbulent Economic Environment: Evidence from Greece

We examine the explanatory power of foreign ownership and domestic multinationality on firm performance among three different groups of sample firms over a turbulent economic period drawing on a unique dataset from Greece. Although the performance of each group of firms declines during the economic recession, we find that compared to Greek non-multinational enterprises (MNEs), foreign-owned firms show a profitability advantage, albeit at a lower profit performance level, and a much higher sales growth performance, considerably smoothing out fluctuations in sales. In turn, over the recession Greek MNEs do not achieve better performance compared to Greek non-MNEs, either in terms of profitability or of sales growth. This finding runs counter to the predominant view that the domestic multinationality factor per se matters, and prompts the need for future research to address particularly the performance impact of new multinationals from small and emerging economies. Hence, we suggest that neither domestic ownership nor domestic multinationality can boost firm performance in turbulent years.