Does foreign ownership matter for the innovation activities of Finnish firms?

In this study we investigate the impact of foreign ownership on the innovation activities of Finnish firms. We analyse the impact on innovation input and on innovation output. Additionally, we analyse the effect foreign ownership has on the companies' embeddedness in the innovation system and the effect foreign ownership has on public R&D funding. Finally, we investigate the firms' productivity and its dependence on foreign vs. domestic ownership. The study contributes three features to the literature. First, it investigates multiple indicators to find the effects of foreign ownership on the companies' performance. Second, the study distinguishes between different types of foreign ownership based on country of ownership; by doing so, the study accounts for home country effects through different governance styles, which are precluded in a mere foreign / domestic dichotomy. The study also singles out domestic multinational firms so as to investigate the impact multinationality has on the innovation activities. Finally, the study employs sample selection models, as well as a multiequation production function model in the vein of Crepon, Duguet and Mairesse (1998), to investigate the impact of foreign ownership.