Foreign Direct Investment and spillover effect: a local firm perspective

Nilufer Yapici

International Journal of Business and Emerging Markets, 2010, vol. 2, issue 4, 425-442

Abstract: Looking at the Foreign Direct Investment (FDI) literature on spillover, one might lose sight of the local firms in the developing countries. I argue that knowledge spillovers lead to superior local firm performance, if the local firms use networks available to them to gain access to external knowledge and enhance their absorptive capacity through exploitation of the external knowledge. Advanced absorptive capacity allows the local firms to recognise knowledge spillovers before the competitors do and exploit it, giving rise to superior products relative competition in the industry.

Keywords: business; emerging markets; FDI; foreign direct investment; spillover effect; knowledge spillovers; local firms; developing countries; firm performance; external knowledge; absorptive capacity. (search for similar items in EconPapers)
Date: 2010
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