Scandinavian Working Papers in Business Administration
Working Papers,
Örebro University, School of Business
No 2011:1: Foreign acquisitions, domestic multinationals, and R&D
Roger Bandick (), Holger Görg () and Patrik Karpaty ()
Additional contact information
Roger Bandick: Institute of Business and Technology, Postal: University of Aarhus , Denmark
Holger Görg: Kiel Institute for the World Economy and University of Kiel, Germany and CEPR
Patrik Karpaty: Department of Business, Economics, Statistics and Informatics, Postal: Örebro University, Swedish Business School, SE - 701 82 ÖREBRO, 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 owners 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: Foreign acquisition; MNE; R&D
28 pages, January 18, 2011
Full text files
wp-1-2011.pdf
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