This paper examines whether the relative performance of firms within Mexican manufacturing industries varies systematically with the presence of foreign subsidiaries. It also analyzes how foreign entry influences the technological structure in host country industries. The findings suggest that (1) foreign presence in an industry is positively correlated with structural efficiency and (2) foreign entry is related to structural changes only in the "modern" part of the industries. The most important source of spillover efficiency is found to be in the competitive pressure induced by the foreign firms.