Do Overseas Subsidiaries Benefit from Parent Firms' Intangibles?

Author Name HOSONO Kaoru (Faculty Fellow, RIETI) / MIYAKAWA Daisuke (Hitotsubashi University) / TAKIZAWA Miho (Toyo University)
Creation Date/NO. May 2017 17-E-073
Research Project Microeconometric Analysis of Firm Growth
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Using data for 3,800 Japanese firms and their 20,000 overseas subsidiaries over the period 2000-2013, we estimate the subsidiary-level production function to check whether or not intangible assets accumulated by parent firms contribute to the subsidiary production. We find that, first, the intangibles (i.e., software, advertisement, and research & development capital) owned by parent firms positively contribute to subsidiary production. Second, the contribution is stronger in the case of smaller subsidiaries. Third, such positive contribution from parent firms' intangible to subsidiaries' production is confirmed for most of the subsidiary locations. These results jointly suggest that intangibles contribute to firm activities even if they are in geographically remote locations.