Innovation and Foreign Ownership

CEPR Discussion Paper No. 8141

43 Pages Posted: 30 Nov 2010

See all articles by Maria Guadalupe

Maria Guadalupe

INSEAD - Economics and Political Sciences; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)

Olga Kuzmina

New Economic School (NES); London School of Economics & Political Science (LSE) - Department of Finance; Centre for Economic Policy Research (CEPR)

Catherine Thomas

Columbia Business School - Finance and Economics

Multiple version iconThere are 3 versions of this paper

Date Written: November 22, 2010

Abstract

This paper uses a rich panel dataset of Spanish manufacturing firms (1990-2006) and a propensity score reweighting estimator to show that multinational firms acquire the most productive domestic firms, which, on acquisition, conduct more product and process innovation (simultaneously adopting new machines and organizational practices) and adopt foreign technologies, leading to higher productivity. We propose a model of endogenous selection and innovation in heterogeneous firms that jointly explains the observed selection process and the innovation decisions. Further, we show in the data that innovation on acquisition is associated with the increased market scale provided by the parent firm.

Keywords: Foreign Ownership, Productivity, Multinational Production, Innovation

JEL Classification: D22, F23, O31

Suggested Citation

Guadalupe, Maria and Kuzmina, Olga and Thomas, Catherine, Innovation and Foreign Ownership (November 22, 2010). CEPR Discussion Paper No. 8141. Available at SSRN: https://ssrn.com/abstract=1717243 or http://dx.doi.org/10.2139/ssrn.1717243

Maria Guadalupe (Contact Author)

INSEAD - Economics and Political Sciences ( email )

Boulevard de Constance
F-77305 Fontainebleau Cedex
France

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Olga Kuzmina

New Economic School (NES) ( email )

45 Skolkovskoe shosse
Moscow, Moscow 121353
Russia

HOME PAGE: http://pages.nes.ru/okuzmina/

London School of Economics & Political Science (LSE) - Department of Finance ( email )

United Kingdom

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Catherine Thomas

Columbia Business School - Finance and Economics ( email )

3022 Broadway
New York, NY 10027
United States

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