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Innovation and Foreign Ownership

Published on Dec 1, 2012in The American Economic Review4.10
· DOI :10.2139/ssrn.1717243
Maria Guadalupe16
Estimated H-index: 16
(Ad: INSEAD),
Olga Kuzmina3
Estimated H-index: 3
(New Economic School),
Catherine Thomas1
Estimated H-index: 1
(LSE: London School of Economics and Political Science)
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.
  • References (69)
  • Citations (160)
References69
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#1Natalia Ramondo (UCSD: University of California, San Diego)H-Index: 12
#2Andrés Rodríguez-Clare (NBER: National Bureau of Economic Research)H-Index: 32
#1Alejandro Artopoulos (University of San Andrés)H-Index: 4
#2Daniel Friel (University of San Andrés)H-Index: 5
Last.Juan Carlos Hallak (NBER: National Bureau of Economic Research)H-Index: 15
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#1Nicholas Bloom (LSE: London School of Economics and Political Science)H-Index: 43
#2John Van Reenan (LSE: London School of Economics and Political Science)H-Index: 60
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#2Pehr Johan Norbäck (Research Institute of Industrial Economics)
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#1Mārtiņš Lindemanis (HHS: Stockholm School of Economics)
#2Artūrs Loze (HHS: Stockholm School of Economics)
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