A Comparative Analysis of the Innovation Performance Between Foreign Subsidiaries and Owned Domestic Firms in Colombian Manufacturing Sector

Abstract

This paper analyzes the innovation performance of foreign subsidiaries compared to domestic owned firms using a firm level dataset of Colombian manufacturing firms. The results show that foreign subsidiaries are superior in knowledge production over domestic firms and this superiority is because they make a more intensive use of internal and external knowledge inputs. However, when foreign subsidiaries are compared with national exporting companies the gaps in innovation performance is not as wide. Our findings can be seen as a new contribution that hightlights how the links between innovation and firm's internationalization define a relevant relationship, important also for developing contexts. 10.3232/GCG.2017.V11.N2.01 Un análisis comparado del desempeño innovador de las empresas extranjeras y nacionales en la industria manufacturera de Colombia Uma análise comparativa do desempenho inovador das empresas nacionais e estrangeiras na indústria manufatureiras da ColômbiaRecibido 15.12.2017 Aceptado 28.01.2017Este artigo analisa o desempenho das subsidiárias estrangeiras em comparação às firmas de propriedade nacional no que tange à inovação, utilizando um dataset ao nível da firma para as empresas manufatureiras colombianas. Os resultados mostram que as subsidiárias estrangeiras apresentam um melhor desempenho na produção de conhecimento do que as empresas nacionais e tal superioridade se deve ao uso mais intensivo de insumos de conhecimento interno e externo. Entretanto, quando as subsidiárias estrangeiras são comparadas às companhias exportadoras nacionais, a diferença do desempenho entre tais empresas não é muito significativo. Estes resultados podem ser considerados uma nova contribuição, que destaca como a combinação entre a inovação e a internacionalização da firma define uma relação relevante e, do mesmo modo, importante para contextos em desenvolvimento.

R&D Cooperation and Investments concerning Sustainable Business Innovation: Empirical Evidence from Polish SMEs

“…Enterprises that operate not only in the country, but also abroad, show a greater propensity to conduct innovative activity compared to entities operating on regional or national markets. There are several studies that confirm the fact that there is a positive relation between the presence of a company on foreign markets and the level and growth of its technological knowledge, e.g., [53,54]. Researchers agree that increased pressure from competitors in international markets is forcing companies to improve their products and adapt to new market conditions.…”

Two-way knowledge spillovers in the presence of heterogeneous foreign subsidiaries: evidence from an emerging country

“…Although many technological activities continue to be located at home, MNEs have evolved toward less hierarchical organizational structures that are based on integrated technology Two-way FDI knowledge spillovers networks, which allows them to more efficiently coordinate their diversified and geographically dispersed innovation activities and capacities, both within the organization and with other actors on a global scale (Hedlund, 1994;Cantwell, 1995;Iammarino and McCann, 2013;Perri et al, 2017). Several studies have thus found a variety of patterns of innovative activities in foreign subsidiaries, observable both in developed countries (Florida, 1997;Cantwell and Mudambi, 2005;Alvarez and Cantwell, 2011;Achcaoucaou et al, 2017) and in the developing world (Hobday and Rush, 2007;Albis and Alvarez, 2017;Galina et al, 2011;Hansen et al, 2020;Marin and Bell, 2010). This stream of literature finds that technologically active subsidiaries abroad generate new knowledge beyond an MNE's headquarters, contributing significantly to the MNE's overall competitive advantages.…”

“…Several studies have thus found a variety of patterns of innovative activities in foreign subsidiaries, observable both in developed countries (Florida, 1997; Cantwell and Mudambi, 2005; Álvarez and Cantwell, 2011; Achcaoucaou et al. , 2017) and in the developing world (Hobday and Rush, 2007; Albis and Álvarez, 2017; Galina et al. , 2011; Hansen et al.…”

“…Traditionally, political attention has been concentrated on the amount of inward FDI attracted by the national economy, supported by horizontal policies, rather than on the more specific attraction of MNEs that contribute the greatest local value-added activities. In addition, although Colombia is not among those countries noted for the international generation of technology, the contribution by foreign subsidiaries to industrial employment, value added, and innovation investments in manufacturing sectors is significant (Albis and Alvarez, 2017). Colombia has also made efforts to include science, technology, and innovation as central pillars of the country's economic and social development, with actions that seek to consolidate an adequate regulatory, institutional, political, and financial framework; however, there is not yet a consolidated innovation system with adequate capacities to produce cutting-edge knowledge and technological innovations (Salazar, 2017).…”