Does multinationality affect the propensity to innovate? an analysis of the third UK community innovation survey

Frenz, Marion and Ietto-Gillies, Grazia (2007) Does multinationality affect the propensity to innovate? an analysis of the third UK community innovation survey. International Review of Applied Economics 21 (1), pp. 99-117. ISSN 0269-2171.

Abstract

The paper is developed at the interface between internationalization and innovation studies. It utilizes data on innovation from the UK Community Innovation Surveys 3 and 2 (CIS3 and CIS2) to assess whether multinationality affects the innova- tion propensity of surveyed enterprises. The indicators of innovation propensity—our dependent variables—are taken from the following CIS sets of variables: innovation outputs; innovation inputs; innovation outcomes (patent applications); innovation continuity/sustainability. The latter element is considered to be the ability of the enter- prise to sustain innovation over a long period of time and the relevant variable is derived from both CIS3 and 2 data. This allows the paper to introduce dynamic elements into the analysis. Four hypotheses are developed and tested. Our main hypothesis states that multinationality per se (i.e. being part of a multinational company network) affects the propensity to innovate. We also test for three sub-hypotheses related to characteris- tics of multinationality: belonging to a group vs being independent; degree of multina- tionality; being part of a foreign vs domestic multinational. The results show that all those CIS enterprises that belong to a multinational corporation—whether UK or foreign—are more likely to exhibit innovation propensity; they are also more likely to engage in innovation activities on a continuous basis.

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