Foreign multinationals and domestic innovation: intra-industry effects and firm heterogeneity

Riccardo Crescenzi, Luisa Gagliardi and Simona Iammarino

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper looks at foreign Multinational Enterprises (MNEs) investing in the UK and at their impact on the innovation performance of domestic firms active in their same sector. By employing data on Foreign Direct Investments matched with firm-level information the paper develops a direct measure of capital inflows at a three-digit industry level. In order to capture innovation in both manufacturing and services the paper relies on a broader proxy for firm innovativeness based on the Community Innovation Survey (CIS). The results suggest that domestic firms active in sectors with greater investments by MNEs show a stronger innovative performance. However, the heterogeneity across domestic firms in terms of internationalization of both their market engagement and ownership structure is the main driver of this effect.

Keywords: multinational enterprises; innovation technological change; intra-industry knowledge diffusion; community innovation survey; United Kingdom (search for similar items in EconPapers)
JEL-codes: F22 O33 (search for similar items in EconPapers)
Date: 2015-04
New Economics Papers: this item is included in nep-bec, nep-cse, nep-ino, nep-int, nep-knm, nep-sbm and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (73)

Published in Research Policy, April, 2015, 44(3), pp. 596-609. ISSN: 0048-7333

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Journal Article: Foreign multinationals and domestic innovation: Intra-industry effects and firm heterogeneity (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:62028

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