Diaspora ownership and international technology licensing by emerging market firms

Aleksandra Gregorič (), Larissa Rabbiosi () and Grazia Santangelo
Additional contact information
Aleksandra Gregorič: Copenhagen Business School
Larissa Rabbiosi: Copenhagen Business School

Journal of International Business Studies, 2021, vol. 52, issue 4, No 6, 691 pages

Abstract: Abstract The liability of origin makes participation in international technology licensing challenging for emerging market firms. We draw on signaling theory to propose that diaspora ownership – diaspora members’ equity investments in their homeland firms – constitutes a reliable third-party signal of emerging market firms’ trustworthiness, which facilitates the access of these firms to international technology licensing. We further hypothesize that the efficacy of diaspora ownership as a third-party signal varies with the firm’s subnational context. Specifically, the relevance of diaspora ownership signal increases with the degree of homogeneity of the within-industry R&D effort in the firm’s sub-national location. This is because, under these conditions, additional signals are required to differentiate between local firms operating in the same industry. In contrast, the diaspora ownership signal has a smaller effect in dysfunctional institutional contexts due to their prohibitive transaction costs. We test our arguments on a matched sample of 597 Indian firms operating between 2006 and 2015, and find general support for the predicted relationships. Our study advances research on the liability of origin of emerging market firms, the work on subnational dimension of international business, and the literature on the benefits diasporans bring to their homelands and resident countries.

Keywords: emerging market firms; international technology licensing; diaspora ownership; liability of origin; subnational environments; signaling theory; matched sample; instrumental variables estimation (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://link.springer.com/10.1057/s41267-020-00324-y Abstract (text/html)
Access to full text is restricted to subscribers.

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:pal:jintbs:v:52:y:2021:i:4:d:10.1057_s41267-020-00324-y

Ordering information: This journal article can be ordered from
http://www.springer. ... nt/journal/41267/PS2

DOI: 10.1057/s41267-020-00324-y

Access Statistics for this article

Journal of International Business Studies is currently edited by John Cantwell

More articles in Journal of International Business Studies from Palgrave Macmillan, Academy of International Business
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().