An impact of foreign mergers on labor; Evidence from Poland

1. Abstract The paper aims to analyze the effect of a foreign merger on target firm’s labour productivity and employment. The theoretical framework is discussed first; followed by the empirical research. The research covers a set of Polish manufacturing companies which merged with foreign counterparts in the years 2000-2005. Paired and Independent Sample T-tests have been employed to investigate labor productivity differences, prior and post the merger. Results are compared to that discovered for firms which have not experienced an ownership change. Finally, the correlation between labor productivity and employment is introduced in order to verify the hypothesis that productivity growth occurs at the cost of labor downsizing. Results show that labor productivity increases due to the foreign merger but not necessarily due to the labor downsizing.