Multiproduct Multinationals and the Quality of Innovation

Sasan Bakhtiari, Antonio Minniti and Alireza Naghavi
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Sasan Bakhtiari: Australian National University

No 2013.69, Working Papers from Fondazione Eni Enrico Mattei

Abstract: This research sheds light on the role of multinational production on the type of innovation performed 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 operations. 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; Specialized Innovation; Multiproduct Firms; Product Scope; Knowledge Spillovers (search for similar items in EconPapers)
JEL-codes: F12 F23 O31 O32 (search for similar items in EconPapers)
Date: 2013-07
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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2013.69

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