Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/273474 
Year of Publication: 
2023
Series/Report no.: 
DICE Discussion Paper No. 403
Publisher: 
Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE), Düsseldorf
Abstract: 
We study how acquisition-FDI during economic crises affects R&D investments of target firms as compared to acquisitions made during periods of economic growth. Using a panel of Spanish firms, we find that foreign multinationals cherry-pick the best domestic firms, irrespective of timing of acquisition. Using matching and difference-in-difference regressions, we find that firms acquired during crises experience smaller declines in R&D than those acquired during periods of growth. Our results are consistent with the opportunity cost theory of R&D over the business cycle, as we also find that crisis-acquired firms prioritize new product creation over achieving economies of scale.
Subjects: 
Foreign Acquisition
Recession
Innovation
Business cycle
JEL: 
G34
O31
G01
D22
ISBN: 
978-3-86304-402-2
Document Type: 
Working Paper

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