Does the entry Mode of FDI matter for Affiliate R&D? First draft-preliminar y version

This paper investigates how the entry mode of foreign direct investment (FDI) affects the R&D behavior of affiliates from a unique data on Swedish multinational firms over a long period of time (1970 to 1998). On average, acquired affiliates are more likely to do R&D and have a higher level of R&D intensity than affiliates started from greenfiled entry. This difference in observed R&D is explained by differences in parent, affiliate, industry and country characteristics. However, the R&D behaviour of each type of affiliate is also explained by different reactions to such characteristics, as predicted by the recent theoretical literature on international M&A. M&As seem to be motivated by asset-seeking motives, especially in the 1990s.