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Potential Spillover from Foreign Companies

In: Proceedings of the 19th International Symposium on Management (INSYMA 2022)

Author

Listed:
  • Cynthia Yohanna Kartikasari

    (University of Surabaya)

  • Suyanto Suyanto

    (University of Surabaya)

Abstract

The textile industry in Indonesia is fascinating to study due to its essential role in the Indonesian economy and as a strategic sector for employment. While imported items continue to dominate raw material supply in this sector, Foreign Direct Investment (FDI) inflows will bring about externality effects on a firm’s efficiency. This current study examines the spillover effect of Foreign Direct Investment on firms’ technical efficiency in Indonesia’s convection industry (ISIC 14111). The study used Data Envelopment Analysis (DEA) models to calculate technical efficiency scores for each firm in the convection sector from 2010 to 2013. Changes in productivity levels are projected to occur due to technical efficiency changes. The findings indicate that Foreign Direct Investment can positively affect changes in technical efficiency through capital-labor ratio, foreign ownership, and imported material.

Suggested Citation

  • Cynthia Yohanna Kartikasari & Suyanto Suyanto, 2023. "Potential Spillover from Foreign Companies," Advances in Economics, Business and Management Research, in: Werner Ria Murhadi & Dudi Anandya & Noviaty Kresna Darmasetiawan & Juliani Dyah Trisnawati & Putu An (ed.), Proceedings of the 19th International Symposium on Management (INSYMA 2022), pages 282-286, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-008-4_37
    DOI: 10.2991/978-94-6463-008-4_37
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