Does Multinationality Matter? Evidence from Swedish firm data
This paper highlights the importance of R&D, domestic multinationals and the distinction between greenfield and acquisition FDI with respect to productivity. The analysis is performed using a panel of firm data covering the entire Swedish manufacturing sector in the 1990’s. The analysis shows that, other things equal, foreign-owned firms have higher total factor productivity than domestic firms. The stock of firm-specific knowledge, measured by R&D, also emerges as important. Consistent with Dunning’s ownership-location-internalization (OLI) paradigm, the results suggest that there is no productivity differential between Swedish and foreign MNEs. So multinationality per se is more important than being foreign. Furthermore, it is shown that the mode of entry matters. Foreign greenfields in Sweden are more productive compared to both acquired firms and Swedish MNEs. Finally there is no evidence for reverse causality.
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Volume (Year): 52 (2006)
Issue (Month): 2 ()
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