(), Holger Görg
and Patrik Karpaty
Roger Bandick: Department of Economics, Postal: Handels- og IngeniørHøjskolen (Institute of Business and Technology) Aarhus Universitet (Aarhus University), Birk Centerpark 15, 7400 Herning, Denmark, ,
Holger Görg: Kiel Institute for the World Economy, Postal: Kiel Institute for the World Economy and University of Kiel, Germany
Patrik Karpaty: Swedish Business School, Postal: Swedish Business School, Örebro University, Sweden
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
35 pages, December 1, 2010
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