Does inward foreign direct investment improve the innovative performance of local firms?

Francisco García, Byungchae Jin and Robert Salomon

Research Policy, 2013, vol. 42, issue 1, 231-244

Abstract: Over the past several decades, research in the fields of international business and strategy has devoted increasing attention to outward foreign direct investment (FDI). Despite extensive scrutiny of the firm-specific motivations for, and consequences of, outward FDI; we know relatively little about inward FDI, the impact of inward FDI on host country firms, and especially, how inward FDI affects the innovativeness of those firms. Extant theoretical arguments predict contrasting effects. One line of research highlights the benefits to host country firms. Another line of research highlights the deleterious consequences to host country firms. Utilizing data from 1799 Spanish manufacturing firms from 1990 to 2002, we investigate the relationships between industry-level and firm-level inward FDI and the innovative performance of host country firms. We find that FDI inflows into Spain are negatively associated with the ex post innovation of local firms. We contrast these findings with those using conventional measures of productivity.

Keywords: Foreign direct investment; Inward FDI; Knowledge spillovers; Knowledge transfer; Technological innovation (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (81)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0048733312001540
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:respol:v:42:y:2013:i:1:p:231-244

DOI: 10.1016/j.respol.2012.06.005

Access Statistics for this article

Research Policy is currently edited by M. Bell, B. Martin, W.E. Steinmueller, A. Arora, M. Callon, M. Kenney, S. Kuhlmann, Keun Lee and F. Murray

More articles in Research Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().