Multinational Production and the Scope of Innovation

44 Pages Posted: 4 Mar 2015

See all articles by Sasan Bakhtiari

Sasan Bakhtiari

Australian Department of Industry; Crawford School, ANU

Antonio Minniti

University of Bologna

Alireza Naghavi

University of Bologna - Department of Economics

Date Written: October 8, 2014

Abstract

This research sheds light on the role of multinational production on the type of innovation performed by firms. We construct matched firm-patent data to measure the scope of innovation, that is the extent to which the output of R&D can be spread across different product lines. We focus on two features of multinational production: (i) core knowledge is geographically more difficult to transfer abroad to foreign production sites, (ii) learning spillovers can occur from international operations. The results reveal that the second effect is more likely to dominate when a firm is active in more product lines. We argue that a more diversified portfolio of products increases a firm’s span of learning from international operations, thereby enhancing its ability to engage in more fundamental research. In contrast, firms with fewer product lines that geographically separate production from innovation focus on more specialized types of R&D.

Keywords: Multinational production, Fundamental innovation, Multiproduct firms, Knowledge spillovers

JEL Classification: F12, F23, O31, O32

Suggested Citation

Bakhtiari, Sasan and Minniti, Antonio and Naghavi, Alireza, Multinational Production and the Scope of Innovation (October 8, 2014). Centro Studi Luca d'Agliano Development Studies Working Paper No. 378. Available at SSRN: https://ssrn.com/abstract=2573086 or http://dx.doi.org/10.2139/ssrn.2573086

Sasan Bakhtiari

Australian Department of Industry ( email )

341 George Street
Sydney, NSW 2000
Australia

HOME PAGE: http://sites.google.com/site/sasanbakhtiari

Crawford School, ANU ( email )

7 Liversidge Street
Lennox Crossing
Canberra, ACT 0200
Australia

HOME PAGE: http://sites.google.com/site/sasanbakhtiari

Antonio Minniti (Contact Author)

University of Bologna ( email )

Piazza Scaravilli 2
Bologna, 40100
Italy

Alireza Naghavi

University of Bologna - Department of Economics ( email )

Piazza Scaravilli 2
Bologna, 40126
Italy

HOME PAGE: http://alirezanaghavi.altervista.org/

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