Mothers and daughters: Heterogeneity of germandirect investments in the Czech Republic

Daniel Münich, Martin Srholec, Michael Moritz, Johannes Schäffler

Research output: Contribution to journalArticlepeer-review

2 Citations (SciVal)


Much has been written on the distinction between vertical and horizontal foreign direct investment. However, most of the empirical literature relies on indirect and aggregated measures only. The aim of this paper is to help fill this gap by examining the differences between German affiliates in the Czech Republic and their mother companies in Germany on the basis of direct evidence on factor requirements. Using a cluster analysis on firm-level data from the unique ReLOC survey, we identify four main groups of firms that partition the sample by broad sectoral lines and by technological, educational and skill intensity of their operations within each of them. More detailed analysis of the clustering reveals that the vertical model dominates in manufacturing, while the horizontal model of investment prevails in the service sector.

Original languageEnglish
Pages (from-to)42-62
Number of pages21
JournalPrague Economic Papers
Issue number1
Publication statusPublished - 2014
Externally publishedYes

Subject classification (UKÄ)

  • Economics and Business


  • Cluster analysis
  • Czech Republic
  • Foreign affiliate
  • Germany
  • Multinational enterprise
  • Vertical investment


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