When FDI takes the form of an acquisition of an established enterprise in the host economy,research suggests that once the initial period of restructuring is over,enterprises acquired by foreign firms tend to:
A)grow their employment base at a faster rate than domestic rivals.
B)engage in downsizing and retrenchment.
C)reduce their pay scales to match those of local companies.
D)reduce employment to cut costs and control prices.

Question

Quizplus · Accepted Answer

When FDI takes the form of an acquisition of an established enterprise in the host economy as opposed to a greenfield investment,the immediate effect may be to reduce employment as the multinational tries to restructure the operations of the acquired unit to improve its operating efficiency.However,even in such cases,research suggests that once the initial period of restructuring is over,enterprises acquired by foreign firms tend to grow their employment base at a faster rate than domestic rivals.

When FDI Takes the Form of an Acquisition of an Established