The Heterogeneity of MNC' Subsidiaries and Technology Spillovers: Explaining positive and negative effects in emerging economies

Anabel Marin () and Subash Sasidharan
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Anabel Marin: SPRU, University of Sussex

No 2008-066, MERIT Working Papers from United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT)

Abstract: Conventional models of multinational corporation (MNC) related spillovers in host economies assume that they derive from the technological assets created at the headquarters. Subsidiaries' activities in the host economy are not given any role in this process. In this paper, drawing on recent advances in MNC literature, we propose an alternative model. In this alternative model the local innovative activity of subsidiaries plays a critical role in accounting for both the possibility of positive or negative effects. More specifically, we distinguish between three types of subsidiaries: "competence creating", "competence exploiting" and passive; and explore conceptually and empirically the spillover effects of each type. Our results confirm our predictions that, in less advanced contexts such as India, only creative subsidiaries have a positive effect on host country firms; that competence exploiting subsidiaries generate negative effects when domestic firms are more advanced; and passive subsidiaries have no effects. The implications for theory and policy are discussed.

Keywords: Technological spillovers; MNCs; emerging economies; subsidiaries heterogeneity (search for similar items in EconPapers)
JEL-codes: F23 O14 O33 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:unm:unumer:2008066

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