Foreign Direct Investment and SME Growth: Highlighting the Need for Absorptive Capacity to Support Linkages between Transnational Corporations and SMEs in Developing Countries

Lugemwa, Peter

doi:10.11648/j.ijefm.20140204.13

Cited by 10 publications

(8 citation statements)

References 63 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…The current findings also agree with Wang, Deng, Kafouros, and Chen (2012) study, which found that different foreign entry modes had a considerable impact on the scope of foreign presence and the productivity outputs of companies in the host country. Additionally, the findings are also in agreement with Lugemwa (2014) who recognized FDI as a critical aspect when it comes to driving growth of the manufacturing sector. The study further supports IMF (2018) observation that foreign direct investment benefits does not appear as expanded resources that can be invested, but it also appears in sharing of knowledge and technology.…”

Section: Discussion Of Results Foreign Direct Investent and Performance Of Manufacturing Firmssupporting

confidence: 89%

“…Newman, Rand, Talbot & Tarp (2015) evaluated the relationship between technology transfer, foreign investment and productivity spillover and empirically established that certain gains in productivity were linked to direct connection between domestic and foreign owned companies along supply chain. Lugemwa (2014) finds that FDI plays an important role in fostering growth of local manufacturing firms. Leman and Ismet, (2015) noted that FDI inflows has been the main source of economic growth among developing countries.…”

Section: Theoretical and Empirical Literaturementioning

confidence: 99%

See 1 more Smart Citation

Foreign Direct Investment and Local Firm’s Performance

Wanjere

Ogutu

Kinoti

et al. 2021

EJBMR

View full text Add to dashboard Cite

This paper investigates the effect of FDI on performance of manufacturing firms in Kenya. Little is documented about the link between FDI and performance of local firms in Kenya . The study has sought to establish the overall effect of FDI on the performance-manufacturing firms in Kenya. The population of study comprised 100 companies registered with Kenya Association Manufacturing as at the time of data collection in 2019 and that had over 10 percent foreign ownership. The respondents were the CEOs of organization. The study used a structured questionnaire to collect primary data. Descriptive and inferential statistics were both used to analyze the data. Data was pretested for normality, linearity, multicollinearity, autocorrelation and homoscedasticity and the data found to meet most of these preconditions. The study developed hypothesis which was tested using simple linear regression to establish the effect of FDI on performance of manufacturing firms. The results revealed that there was a statistically significant relationship between FDI and firm performance. This imply that to achieve better firm performance, the government need to come up with polices geared to attracting more FDI into the key sectors of the economy.

show abstract

Section: Discussion Of Results Foreign Direct Investent and Performance Of Manufacturing Firmssupporting

confidence: 89%

Section: Theoretical and Empirical Literaturementioning

confidence: 99%

Foreign Direct Investment and Local Firm’s Performance

Wanjere

Ogutu

Kinoti

et al. 2021

EJBMR

View full text Add to dashboard Cite

show abstract

“…The transfer of knowledge and technology from multinational enterprises depends on the absorptive capacity of Africa's small and medium-sized enterprises, which often suffer from a high level of informality and information asymmetries. Absorptive capacity -defined as the production and technology gap between domestic and foreign firmsshapes the ability of local firms and small and medium-sized enterprises to benefit from technological spillovers from multinational enterprises (Lugemwa, 2014;Vu, 2018). A recent study on 100 manufacturing firms in Kenya shows that absorptive capacity plays a statistically significant role in FDI's boosting firm performance, implying that firms need some level of knowledge and technology capacity to fully tap the benefits of FDI (Wanjere et al, 2021).…”

Section: Knowledge and Technology Transfermentioning

confidence: 99%

Africa's Development Dynamics 2023

2023

Africa’s Development Dynamics

View full text Add to dashboard Cite

The annual flagship report Africa's Development Dynamics provides the latest information on economic policies on the African continent and in its five regions. It proposes a new narrative assessing Africa's economic, social and institutional performance in light of the targets set by the African Union's Agenda 2063. This 2023 edition explores how Africa can attract investments that offer the best balance between economic, social and environmental objectives. Africa's Development Dynamics is the product of a collaborative approach. It results from a strong partnership between the African Union Commission's Department of Economic Development, Trade, Tourism, Industry and Minerals and the OECD Development Centre, bringing together a team of academic researchers, economists, statisticians, and experts from Africa and other regions.The first two chapters explore the current investment landscape in Africa and recommend priority actions, offering lessons from across the continent and beyond. The next five chapters focus respectively on the five regions as defined by the Abuja Treaty: Southern, Central, East, North and West Africa. These chapters tailor policy recommendations to strategic areas in each region, covering natural ecosystems, renewable energy, climate finance and agri-food value chains.This edition draws on a wide range of data sources to analyse public, private, domestic and foreign sources of investments. These sources are complemented by primary data collected through an AUC/OECD online survey on investment risks, barriers and priorities linked to cross-border investments in African countries. The survey was administered from June to October 2022 to the networks of African business councils and the EU-Africa Business Forum, gathering responses from 58 African and non-African business representatives. Eight in-depth interviews with multinational investors that are members of the OECD Emerging Markets Network (EMnet) were also conducted to supplement the survey results.

show abstract

Section: Related Literaturementioning

confidence: 99%

Foreign Direct Investment and Local firm’s Performance

Wanjere¹,

Ogutu²,

Kinoti³

et al. 2021

amae

View full text Add to dashboard Cite

This paper investigates the effect of FDI on performance of manufacturing firms in Kenya. Little is documented about the link between FDI variables of capital flow, advanced production technology, marketing expertise and management know-how and performance of firms. The study’s sought to establish the effect of each individual FDI variables on firm’s performance. It also sought to established the overall effect of the performance manufacturing firms in Kenya. The population of study comprised 100 companies registered with Kenya Association Manufacturing as at the time of data collection in 2019 and that had over 10 percent foreign ownership. The respondents were the CEOs of organization. The study used a structured questionnaire to collect primary data. Descriptive and inferential statistics were both used to analyze the data. Data was pretested for normality, linearity, multicollinearity, autocorrelation and homoscedasticity and the data found to meet most of these preconditions. The Pearson correlation analysis was employed to discern not only the strength but also the direction of the interrelationships involving the variables. The researcher tested the effect of the components of FDI on performance of manufacturing firms. The study developed one hypothesis and four sub hypothesis. The results revealed that there was a statistically significant relationship between FDI and firm performance. This imply that to achieve better firm performance, the government need to come up with policies geared to attracting more FDI into the key sectors of the economy. Keywords: Foreign Direct Investment, Firm Performance, Capital Flow, Advanced Production Technology, Marketing Expertise, Management Knowhow.

show abstract

Foreign Direct Investment and SME Growth: Highlighting the Need for Absorptive Capacity to Support Linkages between Transnational Corporations and SMEs in Developing Countries

Cited by 10 publications

References 63 publications

Foreign Direct Investment and Local Firm’s Performance

Foreign Direct Investment and Local Firm’s Performance

Africa's Development Dynamics 2023

Foreign Direct Investment and Local firm’s Performance

Contact Info

Product

Resources

About