IDEAS home Printed from https://ideas.repec.org/a/taf/intecj/v26y2012i2p265-280.html
   My bibliography  Save this article

R&D Spillovers and Foreign Market Entry: Acquisition versus Greenfield Investment

Author

Listed:
  • Kazuhiko Yokota
  • Kung-Ming Chen

Abstract

This paper presents a three-stage game to model the entry behavior of a multinational firm in the presence of R&D spillovers. The multinational firm's entry mode choice -- that is, to invest to set up a new plant or merge with a local firm -- is a function of the magnitude of spillovers, as well as the relative cost of greenfield investment, and mergers and acquisitions (M&A). Our model shows that if there exist relatively high R&D leakages and relatively small difference in cost between M&A and greenfield investment, an R&D-intensive foreign firm tends to choose greenfield investment rather than M&A, while if there exist relatively low R&D leakages, the foreign firm is more likely to choose M&A rather than greenfield investment. It is also shown that the size of social welfare of the host country depends on the degree of R&D spillovers. These results produce strong implications for antitrust policy for particularly developing countries.

Suggested Citation

  • Kazuhiko Yokota & Kung-Ming Chen, 2012. "R&D Spillovers and Foreign Market Entry: Acquisition versus Greenfield Investment," International Economic Journal, Taylor & Francis Journals, vol. 26(2), pages 265-280, December.
    • Handle: RePEc:taf:intecj:v:26:y:2012:i:2:p:265-280
    DOI: 10.1080/10168737.2012.688519
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/10168737.2012.688519
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/10168737.2012.688519?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Sanjaya Lall, "undated". "Implications Of Cross-Border Mergers and Acquisitions By TNCs in Developing Countries: A Beginner's Guide," QEH Working Papers qehwps88, Queen Elizabeth House, University of Oxford.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bastian Gawellek & Jingjing Lyu & Bernd Süssmuth, 2016. "Did Chinese Outward Activity Attenuate or Aggravate the Great Recession in Developing Countries?," CESifo Working Paper Series 5735, CESifo.
    2. Armando J. Garcia Pires, 2015. "Multinationals, R&D and Endogenous Productivity Asymmetries," International Economic Journal, Taylor & Francis Journals, vol. 29(1), pages 95-119, March.
    3. Gawellek, Bastian & Lyu, Jingjing & Süssmuth, Bernd, 2021. "Geo-politics and the impact of China's outward investment on developing countries: evidence from the Great Recession," Emerging Markets Review, Elsevier, vol. 48(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Liu, Xiaohui & Zou, Huan, 2008. "The impact of greenfield FDI and mergers and acquisitions on innovation in Chinese high-tech industries," Journal of World Business, Elsevier, vol. 43(3), pages 352-364, July.
    2. Quan-Hoang Vuong & Tran Tri Dung & Thi Chau Ha NguyenN, 2009. "Mergers and Acquisitions in Vietnam’s Emerging Market Economy, 1990-2009," Working Papers CEB 09-045.RS, ULB -- Universite Libre de Bruxelles.
    3. Álvarez, Isabel & Marín, Raquel, 2010. "Entry modes and national systems of innovation," Journal of International Management, Elsevier, vol. 16(4), pages 340-353, December.
    4. P.L. Beena, 2004. "Towards understanding the merger-wave in the Indian corporate sector: A comparative perspective," Centre for Development Studies, Trivendrum Working Papers 355, Centre for Development Studies, Trivendrum, India.
    5. Isabel Alvarez & Georgina Maldonado, 2009. "Technology, foreign-owned firms and competitiveness in the middle-income countries," Analele Stiintifice ale Universitatii "Alexandru Ioan Cuza" din Iasi - Stiinte Economice (1954-2015), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 56, pages 397-419, November.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:intecj:v:26:y:2012:i:2:p:265-280. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RIEJ20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.