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

Riccardo Crescenzi, Luisa Gagliardi and Simona Iammarino

Research Policy, 2015, vol. 44, issue 3, 596-609

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
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (77)

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Working Paper: Foreign multinationals and domestic innovation: intra-industry effects and firm heterogeneity (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:respol:v:44:y:2015:i:3:p:596-609

DOI: 10.1016/j.respol.2014.12.009

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