Working Papers, Department of Economics, Aarhus School of Business, University of Aarhus
Foreign acquisitions, domestic multinationals, and R&D
(), Holger Görg and Patrik Karpaty
Abstract: The aim of this paper is to evaluate the causal effect of
foreign acquisition on R&D intensity in targeted domestic firms. We are
able to distinguish domestic multinationals and non-multinationals, which
allows us to investigate the fear that the change in ownership of domestic
to foreign multinationals leads to a reduction in R&D activity in the
country, as headquarter activities are relocated to the new owner’s home
country. We use unique and rich firm level data for the Swedish
manufacturing sector and different micro-econometric estimation strategies
in order to control for the potential endogeneity of the acquisition dummy.
Overall, our results give no support to the fears that foreign acquisition
of domestic firms lead to a brain drain of R&D activity in Swedish MNEs.
Rather, this paper finds robust evidence that foreign acquisitions lead to
increasing R&D intensity in acquired domestic MNEs and non-MNEs.
Keywords: No keywords; (follow links to similar papers)
JEL-Codes: A10; (follow links to similar papers)
35 pages, December 1, 2010
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