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Firms' Technological Trajectories and the Creation of Foreign Subsidiaries

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  • Davide Castellani

Abstract

Multinational firms are traditionally considered as firms possessing some technological lead and which are exploiting this proprietary advantage in international markets, but a growing literature has been arguing that multinational firms set up foreign subsidiaries not only as a means to exploit their own technology but also to enrich it. This paper provides some empirical evidence for this. The aim of the paper is to assess the effects of the creation of foreign subsidiaries on firms' technological trajectories.The idea is that by setting up subsidiaries in foreign countries, multinational firms can achieve some form of reverse technology transfer that can be expected to affect their technological trajectories.The empirical investigation uses data from 1992 to 1996 for a sample of 2185 Italian manufacturing firms. Results support the view that the creation of manufacturing subsidiaries has a positive impact on firms' productivity trajectories and this positive impact is greater when subsidiaries are created in regions where knowledge spillovers are expected to be relatively higher, such as the US.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal International Review of Applied Economics.

Volume (Year): 16 (2002)
Issue (Month): 3 ()
Pages: 359-371

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Handle: RePEc:taf:irapec:v:16:y:2002:i:3:p:359-371

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Cited by:
  1. Giorgio Barba Navaretti & Davide Castellani, 2003. "Investments Abroad and Performance at Home Evidence from Italian Multinationals," Development Working Papers 180, Centro Studi Luca d\'Agliano, University of Milano.
  2. Davide Castellani, 2002. "Export behavior and productivity growth: Evidence from Italian manufacturing firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 138(4), pages 605-628, December.
  3. Perri, Alessandra & Andersson, Ulf & Nell, Phillip C. & Santangelo, Grazia D., 2013. "Balancing the trade-off between learning prospects and spillover risks: MNC subsidiaries’ vertical linkage patterns in developed countries," Journal of World Business, Elsevier, vol. 48(4), pages 503-514.

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