Title screen

In industries characterised by low intraindustry arbitrage opportunities, firms may extract entrepreneurial rents and ensure profitability by sourcing technological arbitrage opportunities across national borders. Foreign owners provide access to such opportunities. In the setting of 1073 Russian companies operating in the industrial machinery manufacturing industry over the course of 2013-2016, we present initial evidence suggesting that partial foreign ownership may avail international arbitrage opportunities to the firms, resulting in superior performance. The effect of arbitrage opportunities on firm performance is strongest when firms have high financial liquidity. The optimal share of foreign investor control that maximises firm performance is estimated between 39% and 51%.