Scandinavian Working Papers in Economics

Papers in Innovation Studies,
Lund University, CIRCLE - Centre for Innovation Research

No 2016/18: Multinationality, R&D and Productivity: Evidence from the top R&D investors worldwide

Davide Castellani (), Sandro Montresor (), Torben Schubert () and Antonio Vezzani ()
Additional contact information
Davide Castellani: Henley Business School, Postal: University of Reading, UK
Sandro Montresor: Kore University of Enna, Postal: Italy,
Torben Schubert: CIRCLE, Lund University, Postal: CIRCLE, Lund University, PO Box 117, SE-22100 Lund, Sweden
Antonio Vezzani: European Commission, Postal: JRC-IPTS, Spain

Abstract: This paper investigates the effects of multinationality on firm productivity, and contributes to the literature in two respects. First, we argue that multinationality affects productivity both directly and indirectly, through higher incentives to invest in R&D. Second, we maintain that the multinational depth and breadth have different direct effects on productivity and R&D. Using data from the top R&D investors in the world, we propose an econometric model with an R&D and a productivity equation that both depend on multinationality. We find: i) multinational depth has a positive effect on productivity, while the effect of multinational breadth is negative; ii) multinationality (along both dimensions) has a positive effect on R&D intensity, translating into an indirect positive effect on productivity; iii) the positive indirect effect is however not large enough to compensate the negative direct effect of multinational breadth.

Keywords: Multinationality; R&D; Productivity

JEL-codes: F23; F61; O32

30 pages, May 31, 2016

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201618_castellani_et_al.pdf PDF-file 

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