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Cultural Proximity and Local Firms’ catch up with Multinational Enterprises

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  • Wang, Jue
  • Liu, Xiaming
  • Wei, Yingqi
  • Wang, Chengang

Abstract

Integrating and extending new growth theory and resource-based views, this paper provides a theoretical foundation for the catch-up hypothesis. It examines the role of technology gap, technological capability, and cultural proximity in local firms’ catch-up with MNEs. Hypotheses are developed and tested with a dynamic model on a large firm-level panel dataset from Chinese manufacturing. The results confirm that catch-up is positively related to technology gap and technological capability. Furthermore, in the presence of cultural proximity, the speed of local Chinese firms’ catch-up with MNEs from Hong Kong, Macau, and Taiwan is not significantly lower than that with other MNEs.

Suggested Citation

  • Wang, Jue & Liu, Xiaming & Wei, Yingqi & Wang, Chengang, 2014. "Cultural Proximity and Local Firms’ catch up with Multinational Enterprises," World Development, Elsevier, vol. 60(C), pages 1-13.
  • Handle: RePEc:eee:wdevel:v:60:y:2014:i:c:p:1-13
    DOI: 10.1016/j.worlddev.2014.02.010
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    Cited by:

    1. Justina Banioniene & Lina Dagiliene, 2017. "Opportunities to Catch Up Advanced Countries by Investing in Technologies," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 13(1), pages 111-123.
    2. Li, Linjie & Liu, Xiaming & Yuan, Dong & Yu, Miaojie, 2017. "Does outward FDI generate higher productivity for emerging economy MNEs? – Micro-level evidence from Chinese manufacturing firms," International Business Review, Elsevier, vol. 26(5), pages 839-854.
    3. Klein, Michael A., 2019. "Establishment productivity convergence and the effect of foreign ownership at the frontier," World Development, Elsevier, vol. 122(C), pages 245-260.
    4. repec:mje:mjejnl:v:12:y:2017:i:1:p:111-123 is not listed on IDEAS
    5. Yuzhe Miao & Jaeyong Song & Keun Lee & Chuyue Jin, 2018. "Technological catch-up by east Asian firms: Trends, issues, and future research agenda," Asia Pacific Journal of Management, Springer, vol. 35(3), pages 639-669, September.
    6. Sonja Opper & Fredrik N. G. Andersson, 2019. "Are entrepreneurial cultures stable over time? Historical evidence from China," Asia Pacific Journal of Management, Springer, vol. 36(4), pages 1165-1192, December.

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