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Technological Change and Economic Catch-up

The Role of Science and Multinationals

Edited by Grazia D. Santangelo

This book tackles the issue of technological and economic catch-up by examining the role that public research institutions and local policy play in the promotion of this process by fostering local science–technology linkages with incoming foreign-owned multinationals. Although the book comprises various techno-socio-economic contexts and different methodological perspectives, the authors share the idea that public research, educational and political institutions provide capabilities in basic research and training of highly skilled labour, while private corporations establish networking connections with scientific and professional communities (and therefore access to knowledge and contacts) in other parts of the world.
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Chapter 8: Multinationality and Innovative Behaviour in Italian Manufacturing Firms

Davide Castellani and Antonello Zanfei


8. Multinationality and innovative behaviour in Italian manufacturing firms Davide Castellani and Antonello Zanfei 1. INTRODUCTION Over the past decade there has been a remarkable increase in the foreign ownership of assets in Europe. This has attracted the interest of both scholars and practitioners in the effects of inward investments, and inter alia in technological opportunities provided by foreign firms in advanced economies. From this perspective, a key issue is whether and to what extent foreign-owned companies possess superior technology as compared to domestic firms. Several empirical studies have attempted to address this issue by analysing differences in productivity of foreign and domestic companies, controlling for a number of attributes of firms. There is substantial evidence that foreign-owned firms outperform domestic firms in host countries, but more recent works have shown that multinationality is more relevant than foreign ownership as a determinant of performance gaps (see Bellak, 2002 for a review). In particular, foreign-owned firms, which are by definition multinational companies, exhibit a higher productivity as compared to domestic uni-national firms, while non-significant (or even negative) differences emerge with reference to domestic multinationals (Doms and Jensen, 1998; Pfaffermayer and Bellak, 2002; Bellman and Jungnickel, 2002; Criscuolo and Martin, 2003; De Backer and Sleuwaegen, 2003). This is consistent with the theory that firms, whether foreign or domestic owned, need to have some form of ex ante advantage in order to be able to compete in international markets (Dunning, 1970; Caves, 1974; Markusen, 1995). And it...

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