Innovation, Employment Growth, and Foreign Ownership of Firms - A European Perspective

48 Pages Posted: 26 Apr 2013

See all articles by Bernhard Dachs

Bernhard Dachs

AIT Austrian Institute of Technology

Bettina Peters

Center for European Economic Research (ZEW)

Date Written: 2013

Abstract

This paper examines how foreign-owned and domestically owned firms transform innovation into employment growth. The empirical analysis, based on the model of Harrison, Jaumandreu, Mairesse and Peters (2008) and CIS data for 16 countries, reveals important differences between the two groups: Due to general productivity increases and process innovation, foreign-owned firms experience higher job losses than domestically owned firms. At the same time, employment-creating effects of product innovation are larger for foreign-owned firms. Together with employment-stimulating effects stemming from existing products, they overcompensate the negative displacement effects resulting in net employment growth in foreign-owned firms. However, net employment growth turns out to be smaller in foreign-owned firms than in domestically owned firms.

Keywords: employment, innovation, foreign ownership, Community Innovation Survey, host country effects

JEL Classification: O31, O33, F23

Suggested Citation

Dachs, Bernhard and Peters, Bettina, Innovation, Employment Growth, and Foreign Ownership of Firms - A European Perspective (2013). ZEW - Centre for European Economic Research Discussion Paper No. 13-019. Available at SSRN: https://ssrn.com/abstract=2256511 or http://dx.doi.org/10.2139/ssrn.2256511

Bernhard Dachs

AIT Austrian Institute of Technology ( email )

Donau-City-Stra├če 1
Vienna, 1220
Austria

Bettina Peters (Contact Author)

Center for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany
+496211235174 (Phone)
+496211235170 (Fax)

HOME PAGE: http://www.zew.de

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