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Innovation and Foreign Ownership

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  • Maria Guadalupe
  • Olga Kuzmina
  • Catherine Thomas

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 National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16573.

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Date of creation: Dec 2010
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Handle: RePEc:nbr:nberwo:16573

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Cited by:
  1. 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.
  2. 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.
  3. Antràs, Pol, 2011. "Grossman-Hart (1986) Goes Global: Incomplete Contracts, Property Rights, and the International Organization of Production," CEPR Discussion Papers 8598, C.E.P.R. Discussion Papers.
  4. María García-Vega & Patricia Hofmann & Richard Kneller, 2012. "The Internationalisation of R&D and the Knowledge Production Function," CESifo Working Paper Series 3751, CESifo Group Munich.
  5. 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.
  6. 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.
  7. Richard Fabling & Lynda Sanderson, 2011. "Foreign acquisition and the performance of New Zealand firms," Reserve Bank of New Zealand Discussion Paper Series DP2011/08, Reserve Bank of New Zealand.
  8. Juan M. Gallego & Luis H. Gutiérrez & Sang H. Lee, . "A Firm-Level Analysis of ICT Adoption in an Emerging Economy: Evidence from the Colombian Manufacturing Industries," Development Working Papers 362, Centro Studi Luca d\'Agliano, University of Milano.
  9. 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.
  10. Erasmus Kersting & Holger Görg, 2014. "Vertical Integration and Supplier Finance," Kiel Working Papers 1894, Kiel Institute for the World Economy.
  11. Paulo Bastos & Natália Pimenta Monteiro & Odd Rune Straume, 2012. "Privatization and corporate restructuring," NIPE Working Papers 10/2012, NIPE - Universidade do Minho.

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