International reverse spillover effects on parent firms: Evidences from emerging-market MNEs in developed markets

Victor Zitian Chen, Jing Li and Daniel M. Shapiro

European Management Journal, 2012, vol. 30, issue 3, 204-218

Abstract: This study examines whether and to what extent emerging-market multinational enterprises (EM MNEs) use outward foreign direct investment (FDI) in a developed market to capture knowledge spillovers so as to improve their technological capabilities at home. We refer to this as a “reverse spillover” effect on parent firms, and develop the idea based on the knowledge-seeking motive for FDI by EM MNEs. Extending previous studies that have identified the knowledge-seeking motive and have also provided some evidence for its validity, our study focuses on the effects of such FDI on technological capabilities of EM MNEs at home. Using a panel dataset of 493 EM MNEs over the period 2000–2008, and controlling for possible endogeneity, we find evidence supporting the reverse spillover effect: EM MNEs that have subsidiaries in host developed markets richer in technological resources (measured by R&D investments and R&D employment) exhibit stronger technological capabilities at home. We discuss the implications of our study for research and practice related to the internationalization of EM MNEs.

Keywords: Emerging market; Multinational enterprise; Outward FDI; R&D; Knowledge spillover; Technology transfer (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (60)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eurman:v:30:y:2012:i:3:p:204-218

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DOI: 10.1016/j.emj.2012.03.005

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