The impact of OFDI in global cities on innovation by Indian multinationals

Vito Amendolagine, Lucia Piscitello and Roberta Rabellotti

Applied Economics, 2022, vol. 54, issue 12, 1352-1365

Abstract: We investigate the impact of Outward Foreign Direct Investment (OFDI) on the innovation performance of Indian multinationals by analysing their choice of entry mode (cross-border acquisitions versus greenfield investments) and their international location decisions (i.e. choice to locate in a global city). We rely on an augmented fractional logit estimator for 170 foreign investments in high- and medium-high tech manufacturing sectors in the period 2003 to 2011 and find that: (i) compared to greenfield investments, acquisitions generate more technological opportunities; (ii) location in a global city has a negative impact on the Indian companies’ innovation performance; (iii) the positive effect of acquisition decreases if the investment is focused on a global city. These findings should be informative for both firms and government authorities involved in developing going-global strategies.

Date: 2022
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DOI: 10.1080/00036846.2021.1976383

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