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Drivers of Brazilian foreign investments – technology seeking and technology exploiting as determinants of emerging FDI

Author

Listed:
  • Carvalho, Flavia

    () (UNU-MERIT, Maastricht University)

  • Duysters, Geert

    () (UNU-MERIT, Maastricht University, and Eindhoven University of Technology)

  • Costa, Ionara

    () (UNU-MERIT, Maastricht University)

Abstract

The paper uses data from a recent survey on Brazilian firms to investigate the role of technology in the internationalization of firms, and whether if affects the destination of foreign investments. Emerging markets FDI is a much-debated topic these days, and their technology-seeking purpose is a strong driver for the internationalization, as firms are searching for assets in order to compete. We apply a logit model to seek for the influence of determinants and some firms’ competitive advantages on the choice for developed countries as a destination for Brazilian FDI. We also test which modes of entry are preferred when investing in a developed destination. Our results point out the importance of a skilled labor force on the decisions to invest in developed destinations. We found out that technology is an asset used as a competitive resource, and that Brazilian firms do not undertake technology-seeking investments in developed countries, and that acquisitions and Greenfield investments are the main modes of entry.

Suggested Citation

  • Carvalho, Flavia & Duysters, Geert & Costa, Ionara, 2010. "Drivers of Brazilian foreign investments – technology seeking and technology exploiting as determinants of emerging FDI," MERIT Working Papers 017, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  • Handle: RePEc:unm:unumer:2010017
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    File URL: https://www.merit.unu.edu/publications/wppdf/2010/wp2010-017.pdf
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    References listed on IDEAS

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    1. John H Dunning, 1998. "Location and the Multinational Enterprise: A Neglected Factor?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 29(1), pages 45-66, March.
    2. Yadong Luo & Rosalie L Tung, 2007. "International expansion of emerging market enterprises: A springboard perspective," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(4), pages 481-498, July.
    3. Roberto Basile & Anna Giunta & Jeffrey Nugent, 2003. "Foreign Expansion by Italian Manufacturing Firms in the Nineties: an Ordered Probit Analysis," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 23(1), pages 1-24, August.
    4. Hatzius, J., 1997. "Foreign direct investment," LSE Research Online Documents on Economics 20351, London School of Economics and Political Science, LSE Library.
    5. John Dunning, 1981. "Explaining the international direct investment position of countries: Towards a dynamic or developmental approach," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 117(1), pages 30-64, March.
    6. John Child & Suzana B. Rodrigues, 2005. "The Internationalization of Chinese Firms: A Case for Theoretical Extension?," Management and Organization Review, International Association of Chinese Management Research, vol. 1(3), pages 381-410, November.
    7. Shige Makino & Chung-Ming Lau & Rhy-Song Yeh, 2002. "Asset-Exploitation Versus Asset-Seeking: Implications for Location Choice of Foreign Direct Investment from Newly Industrialized Economies," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 33(3), pages 403-421, September.
    8. Child, John & Rodrigues, Suzana B., 2005. "The Internationalization of Chinese Firms: A Case for Theoretical Extension?," Management and Organization Review, Cambridge University Press, vol. 1(03), pages 381-410, November.
    9. Li, Peter Ping, 2007. "Toward an integrated theory of multinational evolution: The evidence of Chinese multinational enterprises as latecomers," Journal of International Management, Elsevier, vol. 13(3), pages 296-318, September.
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    Citations

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    Cited by:

    1. Sanfilippo, Marco, 2013. "Investing abroad from the bottom of the productivity ladder : BRICS multinationals in Europe," BOFIT Discussion Papers 26/2013, Bank of Finland, Institute for Economies in Transition.
    2. Ionara Costa & Howard Rush & Andrew Grantham, 2015. "Knowledge Here, Knowledge There: Multilatinas and their European Subsidiaries," Globelics Working Paper Series 2015-13, Globelics - Global Network for Economics of Learning, Innovation, and Competence Building Systems, Aalborg University, Department of Business and Management.
    3. Richard Baldwin & Toshihiro Okubo, 2014. "Networked FDI: Sales and Sourcing Patterns of Japanese Foreign Affiliates," The World Economy, Wiley Blackwell, vol. 37(8), pages 1051-1080, August.
    4. Liliana SCUTARU, 2014. "Foreign Direct Investment In Romania – Structural And Sectorial Dynamics," SEA - Practical Application of Science, Fundația Română pentru Inteligența Afacerii, Editorial Department, issue 5, pages 563-568, November.
    5. Sanfilippo, Marco, 2015. "FDI from emerging markets and the productivity gap—An analysis on affiliates of BRICS EMNEs in Europe," International Business Review, Elsevier, vol. 24(4), pages 665-676.
    6. repec:wsi:jicepx:v:02:y:2011:i:01:n:s1793993311000208 is not listed on IDEAS
    7. Pradhan, Jaya Prakash & Singh, Neelam, 2010. "Group Affiliation and Location of Indian Firms’ Foreign Acquisitions," MPRA Paper 24018, University Library of Munich, Germany.

    More about this item

    Keywords

    foreign direct investments; emerging markets; technology; innovation; competitive advantages; multinational corporations;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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