Backward FDI linkages as a channel for transferring technology and building innovation capability: The case of Slovenia

Maja Bučar, Matija Rojec and Metka Stare
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Maja Bučar: Faculty of Social Sciences, University of Ljubljana
Metka Stare: [1] aFaculty of Social Sciences, University of Ljubljana [2] bInstitute of Macroeconomic Analysis and Development

The European Journal of Development Research, 2009, vol. 21, issue 1, 137-153

Abstract: Backward linkages of foreign subsidiaries with their local suppliers prove to be one of the main channels of knowledge spillovers via foreign direct investment. This paper analyses the potential of backward linkages of foreign subsidiaries in Slovenia for the transfer of technology and for the innovation capability-building of their local suppliers. Based on a survey of foreign subsidiaries in Slovenia, we aim to investigate the mechanisms of knowledge spillovers via linkages of foreign subsidiaries with local suppliers in Slovenia. This enables us to trace the development of the technological and organizational capability of local suppliers in order to meet the growing demands made by foreign subsidiaries. This firm-level analysis is complemented with an analysis of the national innovation policy to see whether the measures introduced to support innovation are in fact helping local business to improve its technological capability and are thus providing additional stimuli for innovation.Les effets de liaison amont entre les filiales étrangères et les fournisseurs locaux s'avèrent être les principaux vecteurs de transferts de connaissances via les IDE. L'article analyse les effets potentiels de liaison amont de filiales étrangères en Slovénie, en ce qui concerne les transferts de technologie au regard de la construction de capacités d'innovation de leurs fournisseurs locaux. A partir d'une enquête auprès de filiales étrangères en Slovénie, nous étudions les mécanismes de transferts de connaissances à travers les effets de liaison avec les fournisseurs locaux en Slovénie. Ce qui nous permet de suivre le développement des capacités technologiques et organisationnelles des fournisseurs locaux, dans le but de satisfaire les exigences croissantes des filiales étrangères. L'analyse au niveau de la firme est complétée par une analyse de la politique nationale d'innovation afin de vérifier si les mesures destinées à promouvoir l'innovation aident réellement les entreprises locales à améliorer leurs capacités technologiques et si elles constituent, par conséquent, une incitation supplémentaire à l'innovation.European Journal of Development Research (2009) 21, 137–153. doi:10.1057/ejdr.2008.11

Date: 2009
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