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

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  • Vito Amendolagine
  • Lucia Piscitello
  • Roberta Rabellotti

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.

Suggested Citation

  • Vito Amendolagine & Lucia Piscitello & Roberta Rabellotti, 2022. "The impact of OFDI in global cities on innovation by Indian multinationals," Applied Economics, Taylor & Francis Journals, vol. 54(12), pages 1352-1365, March.
    • Handle: RePEc:taf:applec:v:54:y:2022:i:12:p:1352-1365
    DOI: 10.1080/00036846.2021.1976383
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    Cited by:

    1. Leena Ajit Kaushal, 2022. "Institutional and economic determinants of Indian OFDI," Cogent Economics & Finance, Taylor & Francis Journals, vol. 10(1), pages 2147648-214, December.
    2. Massini, Silvia & Piscitello, Lucia & Shevtsova, Yevgeniya, 2023. "The complementarity effect of exporting, importing and R&D on the productivity of Ukrainian MNEs," International Business Review, Elsevier, vol. 32(3).
    3. Piscitello, Lucia & Thakur-Wernz, Pooja, 2023. "Impact of domestic and foreign knowledge mechanisms on the innovation performance of Indian firms," International Business Review, Elsevier, vol. 32(4).

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