Multinationality, R&D and productivity: Evidence from the top R&D investors worldwide

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. (C) 2016 The Author(s). Published by Elsevier Ltd. This is ...

This paper investigates the effects of multinationality onfirm productivity, and contributes to theliterature in two respects. First, we argue that multinationality affects productivity both directly andindirectly through higher incentives to invest in R&D. Second, we maintain that the multinational depthand breadth have different direct effects on productivity and R&D. Using data from the top R&D investorsin the world, we propose an econometric model with an R&D and a productivity equation that bothdepend on multinationality. Wefind: i) multinational depth has a positive effect on productivity, whilethe effect of multinational breadth is negative; ii) multinationality (along both dimensions) has a positiveeffect on R&D intensity, translating into an indirect positive effect on productivity; iii) the positiveindirect effect is however not large enough to compensate the negative direct effect of multinationalbreadth.