 The Birth of a Multinational: Innovation and Foreign AcquisitionsVeronica Rappoport,
Maria Guadalupe () and
Jim Goldman
No 1422, 2017 Meeting Papers from Society for Economic Dynamics Abstract: We model the joint decision to innovate and entry into foreign market in a continuum-time stochastic environment. We test the assumptions and predictions of the model using panel firm-level data from Spanish firms with detailed information on innovation and international activities. We find that innovation is a lumpy and disruptive process: it occurs sporadically and it is associated with a drop in technology immediately after. We incorporate this technological feature into the model and arrive to novel empirical predictions: (1) Firms that eventually become multinationals innovate more often than those that remain domestic. (2) The headquarter unit is more likely to innovate immediately after of becoming multinational, relative to firms that remain domestic and relative to established multinational firms. (3) Although in the cross-section multinational firms are more productive than domestic firms, productivity in the headquarter drops immediately after becoming multinationals. The three predictions are confirmed empirically. Date: 2017 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:red:sed017:1422 Access Statistics for this paper More papers in 2017 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC. |
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