The two faces of foreign management capabilities: FDI and productive efficiency in the UK retail sector Articles uri icon


  • Fu, XL
  • Zhang, J

publication date

  • February 2012

start page

  • 71

end page

  • 88


  • 1


  • 21

International Standard Serial Number (ISSN)

  • 0969-5931

Electronic International Standard Serial Number (EISSN)

  • 1873-6149


  • We investigate the impact of management capabilities of foreign firms on the management capabilities and performance of domestic firms using survey data on the UK retail sector. On average, foreign-owned retail firms achieve higher management capability scores and are more productive than domestic firms. Our results suggest two faces of foreign management capabilities. On the one hand, capabilities that can be codified, for example human resource management capabilities, generate some positive spillovers on the relevant management capabilities of local firms. On the other hand, dimensions of capabilities that are more tacit and highly competitive exert a negative competitive effect on domestic firms' own management capabilities. While the overall management capabilities of domestic firms are found to have a significantly positive effect on their own productive efficiency, we find no evidence of a direct efficiency effect of foreign management capabilities on local firms.


  • competition; fdi; managerial capabilities; productivity; retail sector; spillovers