Should countries block foreign takeovers of R&D champions and promote greenfield entry?

Olivier Bertrand, Katariina Nilsson Hakkala, Pehr Johan Norbäck, Lars Olof Persson

Tutkimustuotos: LehtiartikkeliArticleScientificvertaisarvioitu

19 Sitaatiot (Scopus)

Abstrakti

In R&D intensive industries, governments promote greenfield foreign investments, while being sceptical towards foreign acquisitions of domestic high-quality firms. We develop a theoretical model that shows that foreign acquisitions are conducive to high-quality targets because of strategic effects on the sales price. However, foreign firms 'cherry pick' high-quality targets to expand R&D rather than to downsize. Otherwise, rivals expand R&D, making the acquisition unprofitable. Thus, our model predicts that acquired affiliates invest more in R&D than greenfield affiliates. Using affiliate data, we find evidence that acquired affiliates have a higher level of sequential R&D intensity than greenfield affiliates.

AlkuperäiskieliEnglanti
Sivut1083-1124
Sivumäärä42
JulkaisuCANADIAN JOURNAL OF ECONOMICS-REVUE CANADIENNE D ECONOMIQUE
Vuosikerta45
Numero3
DOI - pysyväislinkit
TilaJulkaistu - elokuuta 2012
OKM-julkaisutyyppiA1 Julkaistu artikkeli, soviteltu

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