Do Multinationals' R&D Activities Stimulate Indigenous Entrepreneurship? Evidence from China's "Silicon Valley"

Hongbin Cai (), Yasuyuki Todo () and Li-An Zhou

No 13618, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Using a unique firm-level dataset from China's "Silicon Valley," we investigate how multinational enterprises (MNEs) affect local entrepreneurship and R&D activities upon entry. We find that R&D activities of MNEs in an industry stimulate entry of domestic firms into the same industry and enhance R&D activities of newly entering domestic firms. By contrast, MNEs' production activities or domestic firms' R&D activities do not have such effect. Since MNEs are technologically more advanced than domestic firms, our findings suggest that diffusion of MNEs' advanced knowledge to potential indigenous entrepreneurs through MNEs' R&D stimulates entry of domestic firms.

JEL-codes: F23 L26 O33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cna, nep-ent, nep-ino, nep-ipr, nep-knm, nep-mic and nep-tra
Date: 2007-11
Note: IO ITI
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