IDEAS home Printed from https://ideas.repec.org/p/ehl/lserod/60281.html
   My bibliography  Save this paper

Foreign direct investment and domestic entrepreneurship: blessing or curse?

Author

Listed:
  • Estrin, Saul
  • Hülya Danakol, Seçil
  • Reynolds, Paul
  • Weitzel, Utz

Abstract

This paper explores the effects of foreign direct investment, measured by mergers and acquisitions, on domestic entrepreneurial entry. We use a micro‐panel of more than two thousand individuals disaggregated by industry in seventy countries including both developed and developing economies, 2000-2009. The theory yields ambiguous predictions about the relationship between FDI and entrepreneurship; positive spillovers via dissemination of technology or negative because of crowding out. Our empirical analysis is conducted at three levels of aggregation. We find the relationship between FDI and domestic entrepreneurship in aggregate and intra-industry to be negative. Policies need to consider how to counteract this effect.

Suggested Citation

  • Estrin, Saul & Hülya Danakol, Seçil & Reynolds, Paul & Weitzel, Utz, 2014. "Foreign direct investment and domestic entrepreneurship: blessing or curse?," LSE Research Online Documents on Economics 60281, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:60281
    as

    Download full text from publisher

    File URL: http://eprints.lse.ac.uk/60281/
    File Function: Open access version.
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jonathan Munemo, 2015. "Foreign Direct Investment, Business Start-up Regulations, and Entrepreneurship in Africa," Economics Bulletin, AccessEcon, vol. 35(1), pages 1-13.
    2. Roberto Antonietti & Raffaello Bronzini & Giulio Cainelli, 2015. "Inward greenfield FDI and innovation," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(1), pages 93-116, March.
    3. Sara Amoroso & Bettina Müller, 2018. "The short-run effects of knowledge intensive greenfield FDI on new domestic entry," The Journal of Technology Transfer, Springer, vol. 43(3), pages 815-836, June.
    4. Seema Singha & Soma Roy Dey Choudhury & Brajesh Kumar, 2022. "Foreign direct investments and spillover effect on entrepreneurial activities in India: an empirical study," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 12(1), pages 423-439, December.
    5. Jonathan Munemo, 2022. "The effect of regulation‐driven trade barriers and governance quality on export entrepreneurship," Regulation & Governance, John Wiley & Sons, vol. 16(4), pages 1119-1140, October.
    6. Rajeev K. Goel, 2018. "Foreign direct investment and entrepreneurship: gender differences across international economic freedom and taxation," Small Business Economics, Springer, vol. 50(4), pages 887-897, April.
    7. Angela Roman & Valentina Diana Rusu, 2016. "The Impact Of The Economic Environment On Entrepreneurship: Evidence From European Countries," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 494-502, July.
    8. Mico Apostolov, 2017. "The impact of FDI on the performance and entrepreneurship of domestic firms," Journal of International Entrepreneurship, Springer, vol. 15(4), pages 390-415, December.
    9. Yılmaz Akyüz, 2015. "Foreign Direct Investment, Investment Agreements, and Economic Development: Myths and Realities," Ekonomi-tek - International Economics Journal, Turkish Economic Association, vol. 4(1), pages 1-47, January.
    10. Yilmaz Bayar & Marius Dan Gavriletea & Zeki Ucar, 2018. "Financial Sector Development, Openness, and Entrepreneurship: Panel Regression Analysis," Sustainability, MDPI, vol. 10(10), pages 1-11, September.
    11. Saurav Pathak & André Laplume & Emanuel Xavier-Oliveira, 2015. "Inbound foreign direct investment and domestic entrepreneurial activity," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 27(5-6), pages 334-356, June.
    12. Munemo, Jonathan, 2017. "Foreign direct investment and business start-up in developing countries: The role of financial market development," The Quarterly Review of Economics and Finance, Elsevier, vol. 65(C), pages 97-106.
    13. Saurav Pathak & Emanuel Xavier-Oliveira & André O. Laplume, 2016. "Technology use and availability in entrepreneurship: informal economy as moderator of institutions in emerging economies," The Journal of Technology Transfer, Springer, vol. 41(3), pages 506-529, June.
    14. Obey Dzomonda & Collins C. Ngwakwe, 2022. "Foreign Direct Investment, Public Sector Venality and Entrepreneurship Development in Developing Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 12(5), pages 71-77, September.
    15. Nguyen, Phuc Canh & Nguyen, Bach & Thanh, Su Dinh, 2022. "The importance of export diversification for national entrepreneurship density," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 114-129.
    16. Ozkan Eren & Masayuki Onda & Bulent Unel, 2016. "Effects of FDI on Entrepreneurial Activity: Evidence from Right-to-Work and Non-Right-to-Work States," Departmental Working Papers 2016-04, Department of Economics, Louisiana State University.

    More about this item

    Keywords

    Foreign direct investment; entrepreneurship; new firm entry; spillovers;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L29 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Other
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ehl:lserod:60281. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: LSERO Manager (email available below). General contact details of provider: https://edirc.repec.org/data/lsepsuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.