How Do External Shocks Affect the Economic Efficiency of Companies with Foreign Direct Investment? (E. Fedorova, A Nikolaev, R. Mirzoeva, сетевое издание "Электронный журнал "Корпоративные финансы" Journal of Corporate Finance Research", N 2, 2022 г.)

Fedorova E., Nikolaev A., Mirzoeva R. How Do External Shocks Affect the Economic Efficiency of Companies with Foreign Direct Investment?

E. Fedorova - Doctor of Economics, Professor of the Department of Corporate Finance and Management, Financial University under the Government of the Russian Federation, Moscow, Russia

A Nikolaev - Deputy Head of the NPP Equipment Department, JSC "GIDROMASHSERVICE", Moscow, Russia

R. Mirzoeva - First-class engineer of the Housing and Maintenance Department of the Black Sea Fleet of the Russian Federation, Sevastopol, Russia

This study aims to assess the effectiveness of export and import activities of domestic companies with foreign direct investment during external shocks. This research is relevant because the impact of spillover effects of foreign direct investment on domestic companies and economic uncertainty after the sanctions and the outbreak of the pandemic was ambiguous. The empirical base contains about 170,000 observations of 18,799 operating companies with a foreign capital share of at least 10% in 2012-2020, obtained from the Ruslana database - Bureau Van Dijk. For the purposes of the study, the companies are grouped by the industry and their roles in international trade. Efficiency assessment is conducted using data envelopment analysis (DEA), accounting for the spillover effects from foreign direct investment. The results of the study confirm that firms that trade in both directions demonstrate better performance. Next come the companies focused only on export or import. Companies that are not involved in international trade are the least efficient (hypothesis 1). Industries that benefit from foreign direct investment inflows include the more capital-intensive sectors (hypothesis 2). External shocks have a negative impact on the efficiency of companies with foreign direct investment (hypothesis 3). This understanding has important implications for long-term economic growth and the recovery of the Russian economy after the current external shocks.

Keywords: foreign direct investment, export, import, technical efficiency, DEA, spillover effects, panel regression analysis, sanctions, COVID-19 pandemic, external shocks