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Foreign Direct Investment and the Sourcing of Technological Advantage: Evidence from the Biotechnology Industry

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  • Weijian Shan

    (J. P. Morgan)

  • Jaeyong Song

    (Columbia University)

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    Abstract

    This paper investigates the proposition that foreign direct investment in a high-technology industry is motivated in part by the sourcing of country-specific technological advantages embedded in foreign firms. The empirical findings show that foreign equity investment is drawn to American biotechnology firms with high levels of patent activity. We suggest that, in the biotechnology industry, foreign direct investment in the form of equity participation can be an efficient vehicle for tapping into country-specific, firm-embodied technological advantages.© 1997 JIBS. Journal of International Business Studies (1997) 28, 267–284

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    Bibliographic Info

    Article provided by Palgrave Macmillan in its journal Journal of International Business Studies.

    Volume (Year): 28 (1997)
    Issue (Month): 2 (June)
    Pages: 267-284

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    Handle: RePEc:pal:jintbs:v:28:y:1997:i:2:p:267-284

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    Cited by:
    1. Criscuolo,Paola & Narula,Rajneesh, 2005. "Using multi-hub structures for international R&D: Organizational inertia and the challenges of implementation," Research Memorandum, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT) 025, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    2. Stoian, Carmen & Filippaios, Fragkiskos, 2008. "Dunning's eclectic paradigm: A holistic, yet context specific framework for analysing the determinants of outward FDI: Evidence from international Greek investments," International Business Review, Elsevier, Elsevier, vol. 17(3), pages 349-367, June.
    3. Paola Criscuolo, 2003. "Reverse Technology Transfer: A Patent Citation Analysis of the European Chemical and Pharmaceutical Sectors," SPRU Working Paper Series, SPRU - Science and Technology Policy Research, University of Sussex 107, SPRU - Science and Technology Policy Research, University of Sussex.
    4. García, Francisco & Avella, Lucía & Fernández, Esteban, 2012. "Learning from exporting: The moderating effect of technological capabilities," International Business Review, Elsevier, Elsevier, vol. 21(6), pages 1099-1111.
    5. Matanda, Margaret Jekanyika & Freeman, Susan, 2009. "Effect of perceived environmental uncertainty on exporter-importer inter-organisational relationships and export performance improvement," International Business Review, Elsevier, Elsevier, vol. 18(1), pages 89-107, February.
    6. Mark Lorenzen & Volker Mahnke, 2002. "Global Strategy and the Acquisition of Local Knowledge How MNCs Enter Regional Knowledge Clusters," DRUID Working Papers, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies 02-08, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    7. Ripollés, Maria & Blesa, Andreu, 2012. "International new ventures as “small multinationals”: The importance of marketing capabilities," Journal of World Business, Elsevier, Elsevier, vol. 47(2), pages 277-287.
    8. Poon, Jessie P.H. & MacPherson, Alan, 2005. "Technology acquisition among Korean and Taiwanese firms in the United States," International Business Review, Elsevier, Elsevier, vol. 14(5), pages 559-575, October.
    9. Christian Le Bas & Parimal Patel, 2007. "Related variety and regional growth in Italy," SPRU Working Paper Series, SPRU - Science and Technology Policy Research, University of Sussex 164, SPRU - Science and Technology Policy Research, University of Sussex.
    10. Shoham, Amir, 2012. "Managing multinational corporations through compensation: The risk-sharing contract method," Journal of Economics and Business, Elsevier, Elsevier, vol. 64(3), pages 231-239.
    11. Wu Zhan & Roger (Rongxin) Chen, 2013. "Dynamic capability and IJV performance: The effect of exploitation and exploration capabilities," Asia Pacific Journal of Management, Springer, Springer, vol. 30(2), pages 601-632, June.
    12. Coombs, Joseph E. & Mudambi, Ram & Deeds, David L., 2006. "An examination of the investments in U.S. biotechnology firms by foreign and domestic corporate partners," Journal of Business Venturing, Elsevier, vol. 21(4), pages 405-428, July.
    13. Holm, Ulf & Sharma, D. Deo, 2006. "Subsidiary marketing knowledge and strategic development of the multinational corporation," Journal of International Management, Elsevier, Elsevier, vol. 12(1), pages 47-66, March.
    14. Gilroy, Bernard Michael & Lukas, Elmar, 2006. "The choice between greenfield investment and cross-border acquisition: A real option approach," The Quarterly Review of Economics and Finance, Elsevier, Elsevier, vol. 46(3), pages 447-465, July.
    15. Bruton, Garry D. & Lohrke, Franz T. & Lu, Jane W., 2004. "The evolving definition of what comprises international strategic management research," Journal of International Management, Elsevier, Elsevier, vol. 10(3), pages 413-429.
    16. Lehrer, Mark & Asakawa, Kazuhiro & Behnam, Michael, 2011. "Home base-compensating R&D: Indicators, public policy, and ramifications for multinational firms," Journal of International Management, Elsevier, Elsevier, vol. 17(1), pages 42-53, March.
    17. Matija Rejec & Slavica Penev, 2011. "Attractiveness of Western Balkan Countries for FDI," Book Chapters, Institute of Economic Sciences, Institute of Economic Sciences.
    18. Phene, Anupama & Almeida, Paul, 2003. "How do firms evolve? The patterns of technological evolution of semiconductor subsidiaries," International Business Review, Elsevier, Elsevier, vol. 12(3), pages 349-367, June.
    19. Hsu, Chia-Wen & Lien, Yung-Chih & Chen, Homin, 2013. "International ambidexterity and firm performance in small emerging economies," Journal of World Business, Elsevier, Elsevier, vol. 48(1), pages 58-67.
    20. Garbade, Philipp J.P. & Omta, S.W.F. (Onno) & Fortuin, Frances T.J.M., 2013. "Exploring the characteristics of innovation alliances of Dutch Biotechnology SMEs and their policy implications," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), Italian Association of Agricultural and Applied Economics (AIEAA), issue 1, April.
    21. Carpano, Claudio & Rahman, Manzur & Roth, Kendall & Michel, John G., 2006. "International competition in mature, localized industries: Evidence from the U.S. furniture industry," Journal of Business Research, Elsevier, Elsevier, vol. 59(5), pages 630-637, May.

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