Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/316994 
Year of Publication: 
2024
Series/Report no.: 
ETLA Working Papers No. 122
Publisher: 
The Research Institute of the Finnish Economy (ETLA), Helsinki
Abstract: 
This study examines the impact of foreign acquisitions on innovation activities in Finnish target firms using comprehensive linked employer-employee data from 2010-2021. Unlike previous research that found negative effects on R&D expenditures and patenting, we measure innovation through the share of R&D personnel in total employment. Our main finding is that foreign acquisitions have a statistically insignificant and economically small impact on the share of R&D employees in target firms. Three years post-acquisition, the point estimate shows a 0.9 percentage point increase in R&D employee share, and we can rule out increases over 2 percentage points and decreases below 0.09 percentage points. This null effect persists across different firm sizes and industries. Our results suggest that con-cerns about foreign acquisitions substantially reducing domestic R&D activity may be overstated, at least when measured by R&D employment.
Subjects: 
Acquisition
M&A
Research
Development
R&D
Innovation
Impact
JEL: 
O03
L06
L64
Document Type: 
Working Paper

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