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Heterogeneous MNC subsidiaries and technological spillovers: Explaining positive and negative effects in India

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  • Marin, Anabel
  • Sasidharan, Subash

Abstract

One of the most intriguing aspects of the recent empirical literature on FDI-related spillover effects is the increasing identification of mixed results. A few studies, particularly in advanced countries have found positive effects; however, a more common scenario in recent studies is the prevalence of insignificant or even negative effects. This is despite the fact that theory predicts substantial positive effects in association with a supposed technological superiority of MNCs relative to domestic firms, particularly in the context of less advanced countries. In this paper, by distinguishing subsidiaries according to their orientation to carry out creative vs. exploitation activities in the host economy, we are able to distinguish situations with positive and negative spillover effects, and we explain why they may be emerging. More specifically, we find that only subsidiaries that are oriented to technologically creative activities have a significantly positive effect in India. In contrast, subsidiaries oriented mostly to technologically exploitative activities generate negative effects in some circumstances. The implications for theory and policy are discussed.

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Bibliographic Info

Article provided by Elsevier in its journal Research Policy.

Volume (Year): 39 (2010)
Issue (Month): 9 (November)
Pages: 1227-1241

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Handle: RePEc:eee:respol:v:39:y:2010:i:9:p:1227-1241

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Keywords: Technological spillovers MNCs Emerging economies Subsidiaries Heterogeneity;

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Citations

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Cited by:
  1. Elisa Giuliani & Chiara Macchi, 2013. "Multinational Corporations’ Economic And Human Rights Impacts On Developing Countries: A Review And Research Agenda," Discussion Papers 2013/158, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  2. Philipp Harms & Pierre-Guillaume Méon, 2011. "An FDI is an FDI is an FDI? The growth effects of greenfield investment and mergers and acquisitions in developing countries," Working Papers 11.10, Swiss National Bank, Study Center Gerzensee.
  3. Franco, Chiara, 2013. "Exports and FDI motivations: Empirical evidence from U.S. foreign subsidiaries," International Business Review, Elsevier, vol. 22(1), pages 47-62.
  4. Giroud, Axèle & Jindra, Björn & Marek, Philipp, 2012. "Heterogeneous FDI in Transition Economies – A Novel Approach to Assess the Developmental Impact of Backward Linkages," World Development, Elsevier, vol. 40(11), pages 2206-2220.
  5. Simona, Gentile-Lüdecke & Axèle, Giroud, 2012. "Knowledge Transfer from TNCs and Upgrading of Domestic Firms: The Polish Automotive Sector," World Development, Elsevier, vol. 40(4), pages 796-807.
  6. Dachs, Bernhard & Peters, Bettina, 2014. "Innovation, employment growth, and foreign ownership of firms," Research Policy, Elsevier, vol. 43(1), pages 214-232.
  7. Huang, Shu-Chin, 2013. "Capital outflow and R&D investment in the parent firm," Research Policy, Elsevier, vol. 42(1), pages 245-260.
  8. John P. Weche Geluebcke & Chiara Franco, 2013. "The death of German firms: What role for foreign direct investment?," Working Paper Series in Economics 264, University of Lüneburg, Institute of Economics.

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