No 2016/14 Are multinationals better at creating technical linkages with local firms?

Abstract

Using data on R&D investors active in Italy and controlling for various indicators of absorptive capacity and for the regional distribution of research activities, we show that multinationality is associated with a higher propensity to technical linkage creation. We also find that domestic owned multinationals are more inclined to R&D contracting out, while foreign multinationals are better at developing R&D cooperation with external parties. However, foreign multinationals are less prone than domestic companies to set up linkages with local counterparts. This suggests that while foreign multinationals generally possess advantages in terms of absorptive capacity and economies of common governance, they might as well face relative disadvantages in terms of experience of local contexts, inhibiting their propensity to set up on-site technical linkages.