Working Paper Series
Olivier Bertrand, Katariina Hakkala
Cross-Border Acquisition or Greenfield Entry: Does it Matter for Affiliate R&D?
() and Pehr-Johan Norbäck
Abstract: This paper investigates how the entry mode of foreign
direct investment (FDI) affects the affiliate R&D activities using unique
data on Swedish multinational firms over a long period of time (1970 to
1998). On average, acquired affiliates are more likely to do R&D and have a
higher level of R&D intensity than affiliates created by greenfield entry.
This difference in observed R&D is explained by differences in parent,
affiliate, industry and country characteristics as well as by different
reactions to these characteristics, as predicted by the recent theoretical
literature on international mergers and acquisitions (M&As). The results
also suggest that M&As are, to a larger extent, motivated by asset-seeking
motives than greenfield entry, especially in the 1990s.
Keywords: FDI; M&A; Greenfield Investment; R&D; Multinational Firm; (follow links to similar papers)
JEL-Codes: F23; L10; L20; O30; (follow links to similar papers)
49 pages, January 30, 2007
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