Innovation and Foreign Ownership

Maria Guadalupe (), Olga Kuzmina and Catherine Thomas

American Economic Review, 2012, vol. 102, issue 7, 3594-3627

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 explains both the observed selection patterns and the innovation decisions. Further, we show in the data that innovation upon acquisition is associated with the increased market scale provided by the parent firm.

JEL-codes: D22 D24 F23 G34 L60 O31 (search for similar items in EconPapers)
Date: 2012
Note: DOI: 10.1257/aer.102.7.3594
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Citations: View citations in EconPapers (350)

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Working Paper: Innovation and Foreign Ownership (2010)
Working Paper: Innovation and Foreign Ownership (2010)
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