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Downstream foreign MNEs and local suppliers’ innovation in a dynamic environment: the moderating effect of network diversity

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  • Yoo Jung Ha

Abstract

This study investigates how the presence of foreign multinational enterprises (MNEs) in downstream sectors influences innovation in upstream local suppliers via backward linkages. Analysis using Korean Innovation Surveys shows backward linkages of foreign MNEs to have negative effects on local suppliers. While local suppliers operating in dynamic environments can avert negative effects, those locked in extant innovation networks continue to experience adverse effects. Our findings show that the effect of MNE presence on local firms should be evaluated in conjunction with given industrial changes and heterogeneous firm strategies.

Suggested Citation

  • Yoo Jung Ha, 2023. "Downstream foreign MNEs and local suppliers’ innovation in a dynamic environment: the moderating effect of network diversity," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 32(3), pages 774-794.
    • Handle: RePEc:oup:indcch:v:32:y:2023:i:3:p:774-794.
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    1. Ronald Findlay, 1978. "Relative Backwardness, Direct Foreign Investment, and the Transfer of Technology: A Simple Dynamic Model," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 92(1), pages 1-16.
    2. Fu, Xiaolan & Pietrobelli, Carlo & Soete, Luc, 2011. "The Role of Foreign Technology and Indigenous Innovation in the Emerging Economies: Technological Change and Catching-up," World Development, Elsevier, vol. 39(7), pages 1204-1212, July.
    3. Havranek, Tomas & Irsova, Zuzana, 2011. "Estimating vertical spillovers from FDI: Why results vary and what the true effect is," Journal of International Economics, Elsevier, vol. 85(2), pages 234-244.
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    1. Yi Qu & Chengang Wang & Yingqi Wei & Lichao Wu & Nan Zheng, 2024. "Does Eco-Innovation of Emerging Market Firms Benefit from Knowledge Spillovers of MNC in a Multi-dimensional Task Environment?," Management International Review, Springer, vol. 64(3), pages 527-565, June.

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