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Cross-Border Acquisition or Greenfield Entry: Does it Matter for Affiliate R&D?

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Author Info

  • Bertrand, Olivier

    (GREMAQ)

  • Hakkala, Katariina

    ()
    (Research Institute of Industrial Economics)

  • Norbäck, Pehr-Johan

    ()
    (Research Institute of Industrial Economics)

Abstract

This paper investigates how the entry mode of foreign direct investment (FDI) affects the affiliate R&D activities using unique data on Swedish multinational firms over a long period of time (1970 to 1998). On average, acquired affiliates are more likely to do R&D and have a higher level of R&D intensity than affiliates created by greenfield entry. This difference in observed R&D is explained by differences in parent, affiliate, industry and country characteristics as well as by different reactions to these characteristics, as predicted by the recent theoretical literature on international mergers and acquisitions (M&As). The results also suggest that M&As are, to a larger extent, motivated by asset-seeking motives than greenfield entry, especially in the 1990s.

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Bibliographic Info

Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 693.

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Length: 49 pages
Date of creation: 30 Jan 2007
Date of revision:
Handle: RePEc:hhs:iuiwop:0693

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Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Phone: +46 8 665 4500
Fax: +46 8 665 4599
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Web page: http://www.ifn.se/
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Related research

Keywords: FDI; M&A; Greenfield Investment; R&D; Multinational Firm;

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References

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Citations

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Cited by:
  1. Jeon, Bang Nam & Olivero, María Pía & Wu, Ji, 2013. "Multinational banking and the international transmission of financial shocks: Evidence from foreign bank subsidiaries," Journal of Banking & Finance, Elsevier, vol. 37(3), pages 952-972.
  2. Steven Globerman & Daniel Shapiro, 2009. "Economic and strategic considerations surrounding Chinese FDI in the United States," Asia Pacific Journal of Management, Springer, vol. 26(1), pages 163-183, March.
  3. Bang Nam Jeon & Maria Pia Olivero & Ji Wu, 2013. "Multinational Banking and Financial Contagion: Evidence from Foreign Bank Subsidiaries," Working Papers 052013, Hong Kong Institute for Monetary Research.
  4. Esther Kalkbrenner, 2010. "Acquired versus Non-Acquired Subsidiaries - Which Entry Mode do Parent Firms Prefer," NRN working papers 2010-22, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.

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