Does Multinationality Affect the Propensity to Innovate? An Analysis of the Third UK Community Innovation Survey

Marion Frenz and Grazia Ietto-Gillies

International Review of Applied Economics, 2007, vol. 21, issue 1, 99-117

Abstract: The paper is developed at the interface between internationalization and innovation studies. It utilizes data on innovation from the UK Community Innovation Surveys 3 and 2 (CIS3 and CIS2) to assess whether multinationality affects the innovation propensity of surveyed enterprises. The indicators of innovation propensity—our dependent variables—are taken from the following CIS sets of variables: innovation outputs; innovation inputs; innovation outcomes (patent applications); innovation continuity/sustainability. The latter element is considered to be the ability of the enterprise to sustain innovation over a long period of time and the relevant variable is derived from both CIS3 and 2 data. This allows the paper to introduce dynamic elements into the analysis. Four hypotheses are developed and tested. Our main hypothesis states that multinationality per se (i.e. being part of a multinational company network) affects the propensity to innovate. We also test for three sub-hypotheses related to characteristics of multinationality: belonging to a group vs being independent; degree of multinationality; being part of a foreign vs domestic multinational. The results show that all those CIS enterprises that belong to a multinational corporation—whether UK or foreign—are more likely to exhibit innovation propensity; they are also more likely to engage in innovation activities on a continuous basis.

Keywords: Multinational companies; innovation; Community Innovation Survey UK; innovation activity in the UK; foreign-owned companies; degree of multinationality (search for similar items in EconPapers)
Date: 2007
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DOI: 10.1080/02692170601035033

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