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Innovation, employment growth, and foreign ownership of firms: A European perspective

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  • Dachs, Bernhard
  • Peters, Bettina

Abstract

This paper examines how foreign-owned and domestically owned firms transform innovation into employment growth. The empirical analysis, based on the model of Harrison, Jaumandreu, Mairesse and Peters (2008) and CIS data for 16 countries, reveals important differences between the two groups: Due to general productivity increases and process innovation, foreign-owned firms experience higher job losses than domestically owned firms. At the same time, employment- creating effects of product innovation are larger for foreignowned firms. Together with employment-stimulating effects stemming from existing products, they overcompensate the negative displacement effects resulting in net employment growth in foreign-owned firms. However, net employment growth turns out to be smaller in foreign-owned firms than in domestically owned firms. --

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Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 13-019.

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Date of creation: 2013
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Handle: RePEc:zbw:zewdip:13019

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Keywords: employment; innovation; foreign ownership; Community Innovation Survey; host country effects;

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Cited by:
  1. Mate-Sanchez-Val, Mariluz & Harris, Richard, 2014. "Differential empirical innovation factors for Spain and the UK," Research Policy, Elsevier, Elsevier, vol. 43(2), pages 451-463.
  2. Camilla Jensen & Itzhak Goldberg, 2014. "Demand-driven innovation policies in the EU," CASE Network Studies and Analyses, CASE-Center for Social and Economic Research 0467, CASE-Center for Social and Economic Research.
  3. Czarnitzki, Dirk & Delanote, Julie, 2012. "Young innovative companies: The new high-growth firms?," ZEW Discussion Papers 12-030, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  4. Dutz, Mark A. & Kessides, Ioannis & O'Connell, Stephen & Willig, Robert D., 2011. "Competition and innovation-driven inclusive growth," Policy Research Working Paper Series 5852, The World Bank.
  5. Guimón, José & Salazar, Juan Carlos, 2014. "Collaboration in innovation between foreign subsidiaries and local universities: evidence from Spain," CIRCLE Electronic Working Papers, Lund University, CIRCLE - Center for Innovation, Research and Competences in the Learning Economy 2014/5, Lund University, CIRCLE - Center for Innovation, Research and Competences in the Learning Economy.
  6. Verena Dill & Uwe Jirjahn, 2014. "Foreign Owners and Perceived Job Insecurity in Germany: Evidence from Linked Employer-Employee Data," Research Papers in Economics 2014-09, University of Trier, Department of Economics.

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