Foreign Ownership, R&D and Technology Sourcing
Original version
Working Paper, NUPI nr. 606. NUPI, 2000Abstract
This paper explores the relationship between domestic R&D and the inflow of foreign capital through
foreign direct investment and foreign ownership. The idea that firms invest in a foreign country in
order to more easily absorb the knowledge and technology of foreign firms is tested empirically using
a unique firm level data set covering foreign ownership and R&D for all Norwegian firms over the
period 1990 to 1996. The study gives no clear evidence supporting the existence of such a motive
behind foreign ownership. On the other hand, the econometric study indicates that foreign investors
may try to exploit their technological advantages in the Norwegian market. The results also show that
the degree of foreign ownership is more volatile when firms are highly R&D intensive. We
hypothesize that this is due to the fact that large R&D investments often result in large losses as well
as gains to the firms.
Description
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