Multinational Network, Innovation and the Growth of Employment

There is a long-standing recognition that innovating firms often have higher employment growth. More recently, there is increasing understanding that innovation is concentrated among a small number of generally large firms. We contribute to this debate by showing that the innovation-employment link for a firm is dependent on its multinational status. While we find that more innovative firms are also faster growing ones – even after accounting for size – there is an even greater effect from innovation for multinationals. While we do find evidence suggesting that such firms benefit from innovation done by other affiliates of the same parent, we nonetheless find that they benefit more from their own innovation as well. Thus, this points to important features of multinationals such as integrated global supply chains thatare key to understanding the relationship between innovation and employment.