Background: This article examines the productivity of domestic firms in the case of the foreign ownership.
Objectives: Foreign direct investments affect the competitive competences of domestic firms; thus, the objective is to see the way foreign ownership drives the growth of domestic firms.
Methods/Approach: The study uses standard models to analyse productivity; they are applied to data sets of Macedonia, a Southeast European economy, and it is concluded that foreign ownership has a major role in domestic firms’ restructuring processes increasing their productivity.
Results: Surely, the results support the principal notion that the augmented presence of foreign firms is to influence the restructuring and business activity of domestic companies positively.
Conclusions: Our analysis verifies that foreign ownership has influenced the overall economy and particularly domestic-owned firms with the constant increase in employment and especially direct export.