We investigate the consequences of MNC subsidiary closures for employees who lose their jobs. We ask to what degree the foreign knowledge that they were exposed to is valued in their new job. We argue theoretically that this foreign knowledge is both valuable and not readily available in the host country but is also distant and therefore difficult to absorb. We predict an inverse u-shaped relationship between the exposure to foreign knowledge and the salary in the new job. We empirically support our predictions for a sample of almost 140,000 affected employees in Portugal from 2002 to 2009.
Knowledge and Productivity; FDI; Knowledge Management; Spillovers
Main Research Area:
The 35th DRUID Celebration Conference 2013: Innovation, Strategy and Entrepreneurship