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American Economic Review: Vol. 102 No. 7 (December 2012)
AER Volume. 102, Issue 7 | 
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AER Forthcoming Articles
Innovation and Foreign Ownership
Article Citation
Guadalupe, Maria,
Olga Kuzmina, and
Catherine Thomas. 2012. "Innovation and Foreign Ownership."
American Economic Review,
102(7): 3594-3627.
DOI: 10.1257/aer.102.7.3594
DOI: 10.1257/aer.102.7.3594
Abstract
This paper uses a rich panel dataset of Spanish manufacturing firms (1990-2006) and a propensity score reweighting estimator to show that multinational firms acquire the most productive domestic firms, which, on acquisition, conduct more product and process innovation
(simultaneously adopting new machines and organizational practices) and adopt foreign technologies, leading to higher productivity. We propose a model of endogenous selection and innovation in heterogeneous firms that explains both the observed selection patterns and the innovation decisions. Further, we show in the data that innovation upon acquisition is associated with the increased market scale provided by the parent firm.
Article Full-Text Access
Full-text Article
Additional Materials
Download Data Set (116.57 KB) | Online Appendix (115.33 KB)
Authors
Guadalupe, Maria (INSEAD, Fontainebleau)
Kuzmina, Olga (New Economic School, Moscow)
Thomas, Catherine (London School of Economics and Political Science)
Kuzmina, Olga (New Economic School, Moscow)
Thomas, Catherine (London School of Economics and Political Science)
JEL Classifications
D22: Firm Behavior: Empirical Analysis
D24: Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
F23: Multinational Firms; International Business
G34: Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
L60: Industry Studies: Manufacturing: General
O31: Innovation and Invention: Processes and Incentives
D24: Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
F23: Multinational Firms; International Business
G34: Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
L60: Industry Studies: Manufacturing: General
O31: Innovation and Invention: Processes and Incentives
