Foreign Ownership and Firm Innovation: Evidence from Korea

Denis Yongmin Joe, Frederick Dongchuhl Oh and Heechan Yoo

Global Economic Review, 2019, vol. 48, issue 3, 284-302

Abstract: This study examines whether foreign equity investment promotes domestic firms’ innovation activities. Using panel data on the Korean firms during the 1999–2013 period, we find that foreign ownership has a positive effect on firms’ innovation activities. Furthermore, we also show that, as compared to non-chaebol firms, chaebol firms’ innovation activity becomes much greater with the increase of foreign ownership. Finally, we investigate industry-level spillover effects of innovation. Specifically, we find that foreign ownership promotes innovation activities via forward linkage, the effect of which is also more pronounced in chaebol firms.

Date: 2019
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DOI: 10.1080/1226508X.2019.1632729

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