Innovation and Foreign Ownership

Maria Guadalupe, Catherine Thomas and Olga Kuzmina

No 8141, CEPR Discussion Papers from Centre for Economic Policy Research

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.

Keywords: Foreign ownership; Innovation; Multinational production; Productivity (search for similar items in EconPapers)
JEL-codes: D22 F23 O31 (search for similar items in EconPapers)
Date: 2010-12
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Innovation and Foreign Ownership (2012)
Working Paper: Innovation and Foreign Ownership (2010)
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