In this article, the authors explore whether foreign-owned multinationals differ
systematically from domestic firms in terms of R&D-investments, transmission of
technology and economic performance. The analysis is based on a sample of 1197
firm-level observations in Sweden, of which one-third is from foreign-owned firms. The
main finding is that domestic multinationals are distinct from other groups of corporate
owners in terms of R&D and embeddedness in innovation systems. However, this
advantage does not manifest itself in superior innovation or productivity performance.
They suggest that domestic multinationals are using the home country for developing
technological capacity that is subsequently exploited in affiliates abroad.
This paper seeks to assess whether foreign-owned firms systematically differ from
host country firms in terms of R&D-investments, transmission of technological
knowledge and economic performance. Domestic and foreign-owned multinationals
jointly play a significant role in Swedish economy, though their share of total
number of firms in the business sector is only 3%. ITPS (2003) report that the
multinational enterprises in Sweden accounted for 46% of overall business sector
employment and tangible investment in 2000 and 53% of value-added, 92% of
export and almost all (96%) of Sweden’s industrial R&D1.
The main justification for the study is the growing importance of multinational
firms and Foreign Direct Investments (FDI), as well as the recent debate on the
importance of corporate governance, the localization of headquarters, crossborder
moves of jobs, externalities and the roles of various key actors in national
innovation systems.
Between 1990 and 2001, production in enterprises located outside the
owners’ country of residence increased from 6% to 11%. Export from foreign
affiliates of multinational corporations represents more than a third of the worldtrade. The literature suggests that the rising trend of foreign direct investments
to a large extent reflects increasing acquisition and mergers in general, rather
than a more internationalized economy. The United Nations (2000) reports that
the cross-boarder share of total acquisition and mergers have been relatively
constant since late 1980s.
The theoretical literature suggests some alternative and complementary
hypotheses as to why firms invest in R&D activities abroad. One has to do with
available opportunities to exploit technological activities created within the home
country. A second hypothesis concerns the exploitation of technological
advantages of the host country. A third hypothesis emphasizes the increasing
complexity and specialization of technology. |
