Where legal systems and market forces enforce contracts inadequately, vertical integration can circumvent these transaction difficulties. But, such environments often also feature highly interventionist government, and even corruption. Vertical integration might then enhance returns to political...

This paper reports a statistical study of the temporal causal relationships between expansion of a firm's multinational structure and the firm's growth in spending of R & D and advertising. We find that firms increase R & D expenditures after expanding their multinational structure, but not vice...