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Identifying Technology Transfer in Foreign Direct Investment: Influence of Industry Conditions and Investing Firm Motives

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  • Wilbur Chung

    (New York University)

Abstract

Firms have different motives for investing abroad, most notably to exercise existing capabilities, but also to build new capabilities by accessing knowledge located abroad. Recognizing this heterogeneity helps determine whether foreign investments transfer technology to their host industries. Using host industries' initial level of competition to differentiate when each of these dichotomous motives is more likely, I examine change in productivity resulting from inward FDI in US manufacturing industries for 1987 through 1991. While controlling for change in industry competition, I find that relatively uncompetitive industries experience productivity growth while competitive industries experience productivity stagnation from FDI. This differential outcome is consistent with heterogeneous investment motives.© 2001 JIBS. Journal of International Business Studies (2001) 32, 211–229

Suggested Citation

  • Wilbur Chung, 2001. "Identifying Technology Transfer in Foreign Direct Investment: Influence of Industry Conditions and Investing Firm Motives," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 32(2), pages 211-229, June.
  • Handle: RePEc:pal:jintbs:v:32:y:2001:i:2:p:211-229
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    8. Penelope Pacheco-Lopez, 2014. "Contrasting the Perception and Response of Domestic Manufacturing Firms to FDI in Sub-Saharan Africa," Studies in Economics 1410, School of Economics, University of Kent.
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    11. Giroud, Axèle & Jindra, Björn & Marek, Philipp, 2012. "Heterogeneous FDI in Transition Economies – A Novel Approach to Assess the Developmental Impact of Backward Linkages," World Development, Elsevier, vol. 40(11), pages 2206-2220.
    12. Cui, Anna Shaojie & Griffith, David A. & Cavusgil, S. Tamer & Dabic, Marina, 2006. "The influence of market and cultural environmental factors on technology transfer between foreign MNCs and local subsidiaries: A Croatian illustration," Journal of World Business, Elsevier, vol. 41(2), pages 100-111, June.
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    19. Claudia de Fuentes, 2008. "Capacidades de absorción de PyMES y derramas de conocimiento de empresas grandes Análisis de un sector tradicional localizado en Querétaro," Economia y Sociedad., Universidad Michoacana de San Nicolas de Hidalgo, Facultad de Economia, issue 22, pages 27-45, Julio-Dic.
    20. Zhao, Wei & Liu, Ling & Zhao, Ting, 2010. "The contribution of outward direct investment to productivity changes within China, 1991-2007," Journal of International Management, Elsevier, vol. 16(2), pages 121-130, June.
    21. Claudia de Fuentes & Gabriela Dutrénit, 2008. "Diferencias de los mecanismos de derramas de conocimiento en dos localidades mexicanas," Economia y Sociedad., Universidad Michoacana de San Nicolas de Hidalgo, Facultad de Economia, issue 22, pages 47-69, Julio-Dic.
    22. Alessandra Perri & Ulf Andersson, 2012. "Knowledge outflows from foreign subsidiaries: The tension between knowledge creation and knowledge protection," Working Papers 18, Department of Management, Università Ca' Foscari Venezia.
    23. Perri, Alessandra & Andersson, Ulf, 2014. "Knowledge outflows from foreign subsidiaries and the tension between knowledge creation and knowledge protection: Evidence from the semiconductor industry," International Business Review, Elsevier, vol. 23(1), pages 63-75.
    24. Anabel Marin & Elisa Giuliani, 2007. "Global and local knowledge linkages: the case of MNE subsidiaries in Argentina," SPRU Working Paper Series 155, SPRU - Science and Technology Policy Research, University of Sussex.
    25. Hamida, Lamia Ben, 2013. "Are there regional spillovers from FDI in the Swiss manufacturing industry?," International Business Review, Elsevier, vol. 22(4), pages 754-769.

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