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Reconceptualizing the spillover effects of foreign direct investment: A process-dependent approach

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  • Wang, Chengqi
  • Deng, Ziliang
  • Kafouros, Mario I.
  • Chen, Yan

Abstract

Theory suggests that FDI spillovers are a function of the level of foreign presence. We extend this view by developing and testing the premise that variations in spillover effects are the result of differences in the process of foreign entry. Drawing from the concept of time compression diseconomies, we develop the constructs of pace and irregularity of foreign entry, and demonstrate that they negatively moderate the relationship between the level of foreign presence and the productivity of host-country firms. We also explain how and why the moderating role of the process of foreign entry is influenced by the intensity of R&D and technical knowledge in domestic industries. We find evidence that firms operating in low-tech sectors are better able to absorb fast foreign entry.

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Bibliographic Info

Article provided by Elsevier in its journal International Business Review.

Volume (Year): 21 (2012)
Issue (Month): 3 ()
Pages: 452-464

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Handle: RePEc:eee:iburev:v:21:y:2012:i:3:p:452-464

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Related research

Keywords: China; Foreign direct investment; Irregularity; Pace; Productivity spillovers; Rhythm; Technology;

References

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Cited by:
  1. Sánchez-Sellero, Pedro & Rosell-Martínez, Jorge & García-Vázquez, José Manuel, 2014. "Absorptive capacity from foreign direct investment in Spanish manufacturing firms," International Business Review, Elsevier, vol. 23(2), pages 429-439.
  2. Ziliang Deng & Rod Falvey & Adam Blake, 2013. "Quantifying Foreign Direct Investment Productivity Spillovers in China: A Computable General Equilibrium Model," Asian Economic Journal, East Asian Economic Association, vol. 27(4), pages 369-389, December.
  3. Kubny, Julia & Voss, Hinrich, 2014. "Benefitting from Chinese FDI? An assessment of vertical linkages with Vietnamese manufacturing firms," International Business Review, Elsevier, vol. 23(4), pages 731-740.

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