IDEAS home Printed from https://ideas.repec.org/p/hhs/cesisp/0069.html
   My bibliography  Save this paper

Does Ownership Matter? The Impact of Foreign Takeovers on Innovation and Productivity Performance

Author

Listed:
  • Ebersberger, Bernd

    () (Fraunhofer Institute for Systems and Innovation Research)

  • Johansson, Börje

    () (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)

  • Lööf, Hans

    () (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)

Abstract

Recent debate has focused on how foreign direct investments and foreign take-overs may effect growth and welfare. In this study we have methodologically approximated foreign-ownership by foreign take-over and raised the question: how would a firm’s behaviour and performance have been if a foreign owner had not acquired the firm? The analysis is based on a sample of 5 186 firm-level observations in four Nordic countries, of which approximately 30 percent of the firms have foreign owners. The econometric design helps us to establish some new findings. First, no robust difference in the propensity to be innovative can be established. Second, among the group of innovative firms, foreign-owned multinationals are generally outperformed by domestic multinationals in R&D and innovation engagement. Finally, the results on labor productivity are at variance with the findings in a large number of previous comparison studies. We find that foreign take-over of firms are neutral with respect to labor productivity, and hence the issue of welfare gain and welfare drain is turned into a non-issue.

Suggested Citation

  • Ebersberger, Bernd & Johansson, Börje & Lööf, Hans, 2006. "Does Ownership Matter? The Impact of Foreign Takeovers on Innovation and Productivity Performance," Working Paper Series in Economics and Institutions of Innovation 69, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  • Handle: RePEc:hhs:cesisp:0069
    as

    Download full text from publisher

    File URL: https://static.sys.kth.se/itm/wp/cesis/cesiswp69.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Henderson, J V, 1974. "The Sizes and Types of Cities," American Economic Review, American Economic Association, vol. 64(4), pages 640-656, September.
    2. Fujita,Masahisa, 1991. "Urban Economic Theory," Cambridge Books, Cambridge University Press, number 9780521396455, December.
    3. Adam B. Jaffe & Manuel Trajtenberg & Rebecca Henderson, 1993. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 577-598.
    4. Starrett, David, 1978. "Market allocations of location choice in a model with free mobility," Journal of Economic Theory, Elsevier, vol. 17(1), pages 21-37, February.
    5. Börje Johansson & John Quigley, 2003. "Agglomeration and networks in spatial economies," Economics of Governance, Springer, vol. 83(1), pages 165-176, October.
    6. James D. Adams, 2002. "Comparative localization of academic and industrial spillovers," Journal of Economic Geography, Oxford University Press, vol. 2(3), pages 253-278, July.
    7. Gene M. Grossman & Elhanan Helpman, 2005. "Outsourcing in a Global Economy," Review of Economic Studies, Oxford University Press, vol. 72(1), pages 135-159.
    8. Philip McCann & Daniel Shefer, 2003. "Location, agglomeration and infrastructure," Papers in Regional Science, Springer;Regional Science Association International, pages 177-196.
    9. Barbara J. Spencer & James A. Brander, 1982. "Tariff Protection and Imperfect Competition," Working Papers 517, Queen's University, Department of Economics.
    10. Weibull, Jorgen W., 1976. "An axiomatic approach to the measurement of accessibility," Regional Science and Urban Economics, Elsevier, vol. 6(4), pages 357-379, December.
    11. Roberta Capello, 2002. "Entrepreneurship and spatial externalities: Theory and measurement," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 36(3), pages 387-402.
    12. Audretsch, David B & Feldman, Maryann P, 1995. "Innovative Clusters and the Industry Life Cycle," CEPR Discussion Papers 1161, C.E.P.R. Discussion Papers.
    13. Acs, Zoltan J & Audretsch, David B & Feldman, Maryann P, 1992. "Real Effects of Academic Research: Comment," American Economic Review, American Economic Association, vol. 82(1), pages 363-367, March.
    14. Andersson, Martin & Karlsson, Charlie, 2005. "Knowledge Accessibility and Regional Economic Growth," Working Paper Series in Economics and Institutions of Innovation 40, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    15. Paul Almeida & Bruce Kogut, 1999. "Localization of Knowledge and the Mobility of Engineers in Regional Networks," Management Science, INFORMS, vol. 45(7), pages 905-917, July.
    16. Andersson, Martin & Karlsson, Charlie, 2004. "The Role of Accessibility for the Performance of Regional Innovation Systems," Working Paper Series in Economics and Institutions of Innovation 9, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    17. Takayama, T, 1994. "Thirty Years with Spatial and Intertemporal Economics," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 28(3), pages 305-322, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Stiebale, Joel, 2012. "Cross-Border M&A and Innovative Activity: Firm-Level Evidence," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 62027, Verein für Socialpolitik / German Economic Association.
    2. Joel Stiebale & Frank Reize, 2008. "The Impact of FDI on Innovation in Target Firms," Ruhr Economic Papers 0050, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    3. Stiebale, Joel & Reize, Frank, 2011. "The impact of FDI through mergers and acquisitions on innovation in target firms," International Journal of Industrial Organization, Elsevier, vol. 29(2), pages 155-167, March.
    4. repec:zbw:rwirep:0050 is not listed on IDEAS

    More about this item

    Keywords

    Multinational enterprises; Take-Over; Corporate governance; Cross-country comparison; Spillovers; R&D; Innovation; Productivity;

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:cesisp:0069. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Vardan Hovsepyan). General contact details of provider: http://edirc.repec.org/data/cekthse.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.