We analyse, over 2004-2008, a sample of approximately 700 foreign subsidiaries and
4,500 domestic firms located in Spain in order to understand the relationship between
local R&D cooperation and innovativeness of the firm. Our ultimate objective is to understand
whether foreign subsidiaries are likely to make a contribution to local innovative
capabilities or if, conversely, they may eventually benefit from conditions for reverse
spillovers. Using a variety of specifications for the innovation-related activities of
the firm, we find that foreign subsidiaries are more cooperative than the average firm
located in Spain, but not necessarily more than affiliated domestic firms (entrepreneurial
groups). However, foreign subsidiaries are more cooperative than affiliated domestic
firms in sectors considered highly dynamic by international technological standards,
whether Spain has a technical advantage in these specific sectors or not. When we focus
on companies which are more innovative than the two-digit industries in which they operate,
we find that foreign subsidiaries tend to be more cooperative than domestic firms
in sectors where Spain displays technological advantage. These sectors comprise traditional
industries displaying little innovation dynamism from an international point of
view. This finding suggests that there may be conditions for reverse spillovers in these
specific Spanish sectors (though measuring them is beyond the objectives of this paper
