Transformations  in
Business & Economics

Efficiency Performance of Foreign-owned Firms in Turkey
Eyup Basti, Nizamettin Bayyurt

ABSTRACT. In this study, efficiency of foreign direct investments (FDIs) in Turkey is analyzed. In order to assess how efficient the FDIs are in Turkey, relative efficiencies of foreign-owned and domestically-owned companies are compared. Firms that have 10% or more foreign direct investment in their capital are classified as foreign-owned companies. 185 Istanbul Stock Exchange listed non-financial sector companies are included in the study. 46 of these companies are foreign-owned and remaining 139 of them are domestically-owned. Analysis includes annual firm level data from 2006. Both standard Data Envelopment Analysis (DEA) and DEA with assurance regions methods are utilized as efficiency measurement technique. Canonical Correlation Analysis is employed to find out the relations between the variables in the set of inputs and outputs for assurance regions. Our results suggest that foreign-owned companies are more efficient than domestically-owned companies.

KEYWORDS: foreign direct investment, efficiency, DEA, Turkey.

JEL classification: G32, F23, M21, L25.