Essays on Firm Behavior in Developing Countries Open Access
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This dissertation studies firm behavior and adaptation of firms in developing countries using firm-level data. Chapter 2 analyses the impact of business group membership on a firm's economic performance when operating in a suboptimal legal environment. The specific null hypothesis is that Indian firms in business groups have advantages in contract intensive industries, especially in Indian states with poorly functioning legal institution. A 2002 national judicial reform is used as quasi-natural experiment as an identification strategy. Chapter 3 further explores Indian business groups by looking at how ownership structure affects TFP, including the impact of family or corporate ownership. These two chapters suggest that business groups can have important economic affects at the firm level. Chapter 4 uses a World Bank firm level survey in 57 developing countries to examine whether MNC presence affects various measures of innovative output. We find that industrial, labor, and input proximities have a positive and significant impact on the likelihood of innovation when interacted with FDI concentration.