Multinational Production and the Scope of Innovation

Sasan Bakhtiari, Antonio Minniti and Alireza Naghavi

No 378, Development Working Papers from Centro Studi Luca d'Agliano, University of Milano

Abstract: This research sheds light on the role of multinational production on the type of innovation per-formed by firms. We construct matched firm-patent data to measure the scope of innovation, that is the extent to which the output of R&D can be spread across different product lines. We focus on two features of multinational production: (i)core knowledge is geographically more difficult to transfer abroad to foreign production sites, (ii) learning spillovers can occur from international op-erations. The results reveal that the second effect is more likely to dominate when a firm is active in more product lines. We argue that a more diversified portfolio of products increases a firm’s span of learning from international operations, thereby enhancing its ability to engage in more fundamental research. In contrast, firms with fewer product lines that geographically separate production from innovation focus on more specialized types of R&D.

Keywords: Multinational production; Fundamental innovation; Multiproduct firms; Knowledge spillovers (search for similar items in EconPapers)
JEL-codes: F12 F23 O31 O32 (search for similar items in EconPapers)
Pages: 44
New Economics Papers: this item is included in nep-cse, nep-ino and nep-tid
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https://www.dagliano.unimi.it/media/WP2014_378.pdf (application/pdf)

Related works:
Working Paper: Multinational Production and the Scope of Innovation (2013)
Working Paper: Multinational Production and the Scope of Innovation (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:csl:devewp:378

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