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Innovation propensity of multinational firms in the service sector

Carvalho, L.M.C. (2010), "Innovation propensity of multinational firms in the service sector", Journal of Transnational Management, 15(1), 26-45.
Abstract:

Innovation is the rallying call of the day for firms to remain competitive and grow in an increasingly competitive global marketplace. However, innovation is still poorly understood beyond the buzzword, and this is especially so in the case of the service sector. This article has two aims: first, it explains innovation in the service sector; then, using data from the Community Innovation Survey III, it analyzes the impact of multinationality in the propensity of innovation in services in Portugal. The indicators of innovation propensity—our dependent variables—are two sets of variables: input innovation variables (intramural and extramural research and development), and output innovation variables (patents). We find that multinational firms indeed affect the propensity to innovate in the services sector, possibly because these firms are part of a network, and these linkages can have spillover effects, making innovation diffusion more efficient. Our results show that size matters and that medium and large firms have a better propensity to innovate.