Multinationals in the Services and Manufacturing Sectors: A firm-level analysis using Japanese data

Using Japanese firm-level data, I investigate multinational enterprises (MNEs) in the services and manufacturing sectors. I examine whether MNEs are more productive than non-MNEs in the services sector as they are in the manufacturing sector. I employ the Kolmogorov-Smirnov (KS) test to compare the overall distribution of productivity by internationalized status, after estimating the productivity premia of MNEs. The results indicate that MNEs are more productive than non-MNEs in the services sector as they are in the manufacturing sector and suggest that the standard firm heterogeneity model can well explain foreign direct investment (FDI) by firms in the services sector.