Innovation in the Global Firm

L. Kamran Bilir and Eduardo Morales

No 22160, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: How global are the gains from innovation? When firms operate production plants in multiple countries, technological improvements developed in one location may be shared with foreign sites for efficiency gain. We develop a model that accounts for such transfer, and apply it to measure private returns to R&D investment for a panel of U.S. multinationals during 1989-2008. Our estimates indicate that innovation increases performance at firm locations beyond the innovating site: the median U.S. multinational firm realizes abroad 20 percent of the return to its U.S. R&D investment, suggesting estimates based only on domestic operations understate multinationals' gain from innovation, and revealing a spatial disconnect between the costs and potential gains of policies that encourage multinationals' U.S. innovation.

JEL-codes: F00 F23 O30 (search for similar items in EconPapers)
Date: 2016-04
New Economics Papers: this item is included in nep-bec, nep-cse, nep-ino, nep-int, nep-sbm and nep-tid
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Citations: View citations in EconPapers (7)

Published as L. Kamran Bilir & Eduardo Morales, 2020. "Innovation in the Global Firm," Journal of Political Economy, vol 128(4), pages 1566-1625.

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