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Effect of cultural distance on reverse technology spillover from outward FDI: a bane or a boon?

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  • Ye Jiao
  • Zhao Yunpeng
  • Cui Chuanjiang
  • Zhao Lu

Abstract

This article aims to investigate the role of cultural distance in the relationship between outward foreign direct investment (OFDI) and reverse technology spillover. Chinese firm-level data have been used to examine whether the cultural distance between domestic and host countries is a bane or a boon to innovation when firms engage in OFDI for technology acquisition. Generally, businesses with similar cultural backgrounds have an easier time-making technological progress. However, this research revealed a deeper level of reverse technological spillover among firms that invest in Europe and the USA, which are considered to quite culturally distant from China. Reverse technological spillover through OFDI is positively affected by individualism and uncertainty avoidance, which are the two dimensions of cultural distance.

Suggested Citation

  • Ye Jiao & Zhao Yunpeng & Cui Chuanjiang & Zhao Lu, 2018. "Effect of cultural distance on reverse technology spillover from outward FDI: a bane or a boon?," Applied Economics Letters, Taylor & Francis Journals, vol. 25(10), pages 693-697, June.
    • Handle: RePEc:taf:apeclt:v:25:y:2018:i:10:p:693-697
    DOI: 10.1080/13504851.2017.1356074
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    Cited by:

    1. Yahui Chen & Changsheng Xu & Ming Yi, 2019. "Does the Belt and Road Initiative Reduce the R&D Investment of OFDI Enterprises? Evidence from China’s A-Share Listed Companies," Sustainability, MDPI, vol. 11(5), pages 1-14, March.

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