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The Innovation and Productivity Effect of Foreign Take-Over of National Assets

Börje Johansson, Hans Lööf () and Bernd Ebersberger
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Bernd Ebersberger: MCI

No 141, Working Paper Series in Economics and Institutions of Innovation from Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

Abstract: Over the past decades, there has been a dramatic increase in the foreign-ownership of firms in the four Nordic countries Denmark, Finland, Norway and Sweden. This increase has generated interest in the welfare effect of foreign take-over of national assets. In this paper we ask: how would a firm’s behaviour and performance have been if a foreign owner had not acquired the firm? The analysis is based on a sample of 5 186 firm-level observations in four Nordic countries, of which close to 30 percent are owned by foreign companies. Using an empirical approach that accounts for both selection bias and simultaneity bias, we establish some new findings regarding foreign ownership. First, no robust difference in the propensity to be innovative can be established. Second, among the group of innovative firms, foreign-owned multinationals are generally outperformed by domestic multinationals in R&D and innovation engagement. Third, despite the fact that domestic multinationals are considerably more involved in national innovation systems than other firms, they are not producing more innovation per R&D-dollar, controlling for firm size, human capital and industry. Finally, we find that foreign take-over of firms is neutral with respect to labour productivity, and hence that no evidence of welfare gain or welfare drain of foreign ownership can be established.

Keywords: Multinational enterprises; Take-Over; Corporate Governance; Cross-country comparison; Spillovers; R&D; Innovation; Productivity (search for similar items in EconPapers)
JEL-codes: C31 D21 F23 G34 L22 O31 O33 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2008-09-09
New Economics Papers: this item is included in nep-eff, nep-ino, nep-ipr, nep-pr~ and nep-knm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Chapter: The Innovation and Productivity Effect of Foreign Takeover of National Assets (2010) Downloads
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