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Innovation and Foreign Ownership

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  • Guadalupe, Maria
  • Kuzmina, Olga
  • Thomas, Catherine

Abstract

This paper uses a rich panel dataset of Spanish manufacturing firms (1990-2006) and a propensity score reweighting estimator to show that multinational firms acquire the most productive domestic firms, which, on acquisition, conduct more product and process innovation (simultaneously adopting new machines and organizational practices) and adopt foreign technologies, leading to higher productivity. We propose a model of endogenous selection and innovation in heterogeneous firms that jointly explains the observed selection process and the innovation decisions. Further, we show in the data that innovation on acquisition is associated with the increased market scale provided by the parent firm.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8141.

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Date of creation: Dec 2010
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Handle: RePEc:cpr:ceprdp:8141

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Keywords: Foreign Ownership; Innovation; Multinational Production; Productivity;

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References

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Citations

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Cited by:
  1. Richard Fabling & Lynda Sanderson, 2011. "Foreign Acquisition and the Performance of New Zealand Firms," Treasury Working Paper Series 11/06, New Zealand Treasury.
  2. Horst Raff & Joachim Wagner, 2013. "Foreign Ownership and the Extensive Margins of Exports: Evidence for Manufacturing Enterprises in Germany," Kiel Working Papers 1845, Kiel Institute for the World Economy.
  3. Facundo Piguillem & Loris Rubini, 2013. "Barriers to Firm Growth in Open Economies," EIEF Working Papers Series 1304, Einaudi Institute for Economics and Finance (EIEF), revised Mar 2013.
  4. Paulo Bastos & Natália Pimenta Monteiro & Odd Rune Straume, 2012. "Privatization and corporate restructuring," NIPE Working Papers 10/2012, NIPE - Universidade do Minho.
  5. Erasmus Kersting & Holger Görg, 2014. "Vertical Integration and Supplier Finance," Kiel Working Papers 1894, Kiel Institute for the World Economy.
  6. Juan Gallego & Luis H. Gutiérrez & Sang H. Lee, 2011. "A firm-level analysis of ICT adoption in an emerging economy: evidence from the colombian manufacturing industries," DOCUMENTOS DE TRABAJO 009155, UNIVERSIDAD DEL ROSARIO.
  7. María García-Vega & Patricia Hofmann & Richard Kneller, . "The Internationalisation of R&D and the Knowledge Production Function," Discussion Papers 12/02, University of Nottingham, GEP.
  8. Cagatay Bircan, 2013. "Foreign direct investment and wages: does the level of ownership matter?," Working Papers 157, European Bank for Reconstruction and Development, Office of the Chief Economist.
  9. Pol Antràs, 2011. "Grossman-Hart (1986) Goes Global: Incomplete Contracts, Property Rights, and the International Organization of Production," NBER Working Papers 17470, National Bureau of Economic Research, Inc.
  10. Laura Alfaro & Maggie X. Chen, 2012. "Market Reallocation and Knowledge Spillover: The Gains from Multinational Production," Harvard Business School Working Papers 12-111, Harvard Business School, revised Jun 2013.
  11. Stiebale, Joel, 2013. "The impact of cross-border mergers and acquisitions on the acquirers' R&D — Firm-level evidence," International Journal of Industrial Organization, Elsevier, vol. 31(4), pages 307-321.

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