Sunday, 16 January 2011

What happens to R&D in domestic multinationals after foreign acquisition?

With foreign ownership of domestic companies becoming increasingly common, questions are mounting as to the what the consequences of said ownership are. One area of concern is the effect on research and development. This new column from by Roger Bandick, Holger Görg and Patrik Karpaty presents new evidence from Sweden, where flagship firms such as Volvo and Saab are now foreign owned, that it hopes will reassure policymakers, and others.

The money quote from the article would be:
The key policy implication of the analysis is that foreign acquisitions can have beneficial effects for domestic R&D activity. Hence, there is no need for fears and therefore no need for policymakers to start thinking about limiting international merger and acquisition activity. Quite the contrary, foreign acquisitions may be an important way to generate new knowledge and contribute to boosting the level of technology in the domestic economy.
So them foreign types may not be so bad after all. Just don't tell Winston Peters.

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