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Foreign takeovers in the Nordic countries (FOTON)

  • Published 03/03/2005
  • Last updated 20/05/2011
Like domestic owned multinational companies, foreign owned multinational companies represent equally positive opportunities for Nordic trade and industry, both in terms of innovative capabilities and value creation. There are no apparent reasons for leading a different policy towards companies with foreign ownership. The governments in the Nordic countries should encourage initiatives that attract this type of companies. Foreign owned multinationals take part in international networks that might benefit other firms in the national innovation system.

The main conclusion is that we find no clear differences between domestic multinationals and affiliates of foreign multinationals as regards innovation activities. Hence foreign companies are not more likely to be innovative than domestic companies. 

However, domestic owned multinationals outperform foreign owned firms in terms of R&D investments in Finland and Sweden. In Norway domestic owned multinationals and Anglo-Saxon owned multinationals have significantly higher R&D intensity than other firms.

Domestic owned multinationals closer to the national innovation system
It seems that domestic owned multinationals are the main beneficiaries of public R&D support. Moreover, the domestic owned multinationals are also more closely embedded in the national innovation system compared to foreign owned multinationals, meaning that they are more likely to interact with other firms and institutions. This is important, as insufficient involvement in this area weakens the competence flow from the foreign owned companies to the rest of the economy. 

Technological advance and competence building is characterized by constant interplay and mutual learning between different types of knowledge and actors, including firms, institutes, universities, sources of financing, relevant public agencies and more.

Marketing the Nordic countries as innovation friendly
Given that the framework conditions are favourable to foreign investments in the Nordic countries, we would argue that the best option for attracting more foreign owners would be to market these countries as innovation friendly and knowledge intensive countries.

Foreign investors will normally look for the same favourable framework conditions as domestic companies. An enterprise friendly innovation policy will also encourage foreigners to invest in these countries. Thus the activities of the national “Invest in” institutions should be strengthened (such an institution lacks and should be established in Norway). 
The Nordic Council of Ministers should consider establishing a new Nordic web portal, leading potential investors to relevant information and potential contacts. 

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Project participants

  • Per Koch

    NIFU STEP Studies in Innovation, research and Education Norway