Foreign Acquisitions, Domestic Multinationals, and R&D

Roger Bandick, Holger Görg and Patrik Karpaty

No 5252, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The aim of this paper is to evaluate the causal effect of foreign acquisition on R&D intensity in targeted domestic firms. We are able to distinguish domestic multinationals and non-multinationals, which allows us to investigate the fear that the change in ownership of domestic to foreign multinationals leads to a reduction in R&D activity in the country, as headquarter activities are relocated to the new owner's home country. We use unique and rich firm level data for the Swedish manufacturing sector and different micro-econometric estimation strategies in order to control for the potential endogeneity of the acquisition dummy. Overall, our results give no support to the fears that foreign acquisition of domestic firms lead to a brain drain of R&D activity in Swedish MNEs. Rather, this paper finds robust evidence that foreign acquisitions lead to increasing R&D intensity in acquired domestic MNEs and non-MNEs.

Keywords: foreign acquisitions; domestic multinationals; R&D (search for similar items in EconPapers)
JEL-codes: F23 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2010-10
New Economics Papers: this item is included in nep-ifn and nep-ino
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Published - published in: Scandinavian Journal of Economics, 2014, 116 (4), 1091-1115

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Related works:
Chapter: Foreign Acquisitions, Domestic Multinationals, and R&D (2016)
Journal Article: Foreign Acquisitions, Domestic Multinationals, and R&D (2014)
Working Paper: Foreign acquisitions, domestic multinationals, and R&D (2011)
Working Paper: Foreign Acquisitions, Domestic Multinationals, and R&D (2010)
Working Paper: Foreign acquisitions, domestic multinationals, and R&D (2010)
Working Paper: Foreign acquisitions, domestic multinationals, and R&D (2010)
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