The Innovation and Productivity Effect of Foreign Take-Over of National Assets
2008 (English)Report (Other academic)
Over the past decades, there has been a dramatic increase in the foreign-ownership offirms in the four Nordic countries Denmark, Finland, Norway and Sweden. This increasehas generated interest in the welfare effect of foreign take-over of national assets. In thispaper we ask: how would a firm’s behaviour and performance have been if a foreignowner had not acquired the firm? The analysis is based on a sample of 5 186 firm-levelobservations in four Nordic countries, of which close to 30 percent are owned by foreigncompanies. Using an empirical approach that accounts for both selection bias andsimultaneity bias, we establish some new findings regarding foreign ownership. First, norobust difference in the propensity to be innovative can be established. Second, amongthe group of innovative firms, foreign-owned multinationals are generally outperformedby domestic multinationals in R&D and innovation engagement. Third, despite the factthat domestic multinationals are considerably more involved in national innovationsystems than other firms, they are not producing more innovation per R&D-dollar,controlling for firm size, human capital and industry. Finally, we find that foreign takeoverof firms is neutral with respect to labour productivity, and hence that no evidence ofwelfare gain or welfare drain of foreign ownership can be established.
Place, publisher, year, edition, pages
CESIS, KTH Royal Institute of Technology , 2008. , 32 p.
CESIS Working Paper Series in Economics and Institutions of Innovation, 141
Multinational enterprises, Take-Over, Corporate governance, Cross-country comparison, Spillovers, R&D, Innovation, Productivity
IdentifiersURN: urn:nbn:se:kth:diva-72363OAI: oai:DiVA.org:kth-72363DiVA: diva2:487526
QC 201202092012-02-092012-01-312012-02-09Bibliographically approved