Technology Transfer from Acquisition FDI and the Absorptive Capacity of Domestic Firms: An Empirical Investigation

Sourafel Girma

Open Economies Review, 2005, vol. 16, issue 2, 175-187

Abstract: This paper seeks to establish the role of absorptive capacity in technology transfer from acquisition FDI in U.K. manufacturing. It finds that the rate of productivity change following a foreign take-over is higher the higher the pre-acquisition productivity level of the acquired firm, indicating the importance of absorptive capacity. However, beyond some critical level of initial productivity, the rate of technology transfer due to foreign acquisition starts to decline. It seems that U.K. acquisition targets that had been operating nearer the domestic technology frontier have less to gain from their association with foreign multinationals. Copyright Springer Science + Business Media, Inc. 2005

Keywords: foreign direct investment; acquisitions; productivity (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (35)

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DOI: 10.1007/s11079-005-5874-2

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