Foreign Acquisitions of Swedish Companies: Effects on R&D and Productivity

This paper studies relative productivity and R&D expenditures as detenninants of foreign acquisitions of Swedish manufacturing firms, as well as, the productivity and R&D performance of these firms after the acquisitions. The results are that foreign owned firms have a higher productivity and use a more capital-intensive technology than domestic ones. The relative labor productivity improves after the acquisition, while the development of relative total factor productivity is more uncertain. We find no evidence of any reduction of R&Dspending of foreign firms. R&D-spending does not seem to explain which domestic firms are acquired, however, foreign ownership has increased the most in R&D-intensive industries.