The innovative performance of foreign-owned enterprises in small open economies

This paper compares the innovative performance of foreign-owned and domestically owned enterprises in five European countries. We look at innovation inputs, outputs, and examine how strong foreign-owned enterprises are embedded in the innovations systems of their host countries. We find that foreign ownership is associated with similar levels of innovation input, but higher levels of innovation output and higher labour productivity compared to domestic ownership. In four of the five countries, affiliates of foreign multinationals show a similar or even a higher propensity to co-operate with domestic partners than domestically owned enterprises.