Foreign Direct Investment Strategies and Firms' Capabilities

Siotis, Georges

doi:10.1111/j.1430-9134.1999.00251.x

Cited by 49 publications

(50 citation statements)

References 13 publications

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“…For instance, using a panel of Italian …rms Benfratello and Sembenelli (2002) report evidence that, in the aggregate, a change in ownership from domestic to foreign has no e¤ect on the productivity 4 A fall in the target …rm's pro…tability may also occur when FDI is driven by a technology sourcing. This conjecture has received both theoretical and empirical support (for theoretical results, see Fosfuri and Motta (1999), Siotis (1999), and for empirical evidence Neven and Siotis (1996), Dri¢eld and Love (2003)). However, while sourcing may be a realistic motive, its importance is likely to be very limited compared to "traditional" FDI, particularly in the context of Spain.…”

Section: Motivation and Testable Hypotheses 21 Technology Transfersmentioning

confidence: 99%

Foreign Direct Investment, Competitive Pressure and Spillovers. An Empirical Analysis on Spanish Firm Level Data

2003

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Foreign Direct Investment, Competitive Pressure and Spillovers.An Empirical Analysis of Spanish Firm Level Data* A short review of the theoretical and empirical evidence indicates that foreign direct investment (FDI) has the potential to increase the intensity of competition as well as to act as a channel for technology transfers. One would expect, all else equal, an increase in average firm performance following a wave of FDI, as multinational corporations (MNCs) enjoy higher levels of efficiency and have the potential to generate positive spillovers. At the same time, the entry of foreign firms has also been associated with an increase in competitive pressure on the domestic market. Using a large firm level dataset covering all sectors of Spanish manufacturing during the period 1983-96, we disentangle these three effects by estimating a dynamic model of firm level performance, which we proxy by profitability. We find that FDI has a positive long-run effect on the profitability of target firms, but this is limited to firms belonging to R&D intensive sectors. In addition, the results indicate that foreign presence dampens margins. However, this effect appears to be more than compensated by positive spillovers in the case of knowledge intensive industries.JEL Classification: F23, L40 and L60

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Section: Motivation and Testable Hypotheses 21 Technology Transfersmentioning

confidence: 99%

Foreign Direct Investment, Competitive Pressure and Spillovers. An Empirical Analysis on Spanish Firm Level Data

2003

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“…Scholars have recently pointed out a different type of FDI-technology-seeking FDI-which is motivated by a desire to source or seek external foreign knowledge (Dunning and Narula 1995;Kuemmerle 1999;Fosfuri and Motta 1999;Siotis 1999;Le Bas and Sierra 2002). Firms engaging in technology-seeking FDI try to capture knowledge spillovers from firms in the host countries in which they invest.…”

Section: Motives For Fdimentioning

confidence: 99%

Collecting the Pieces of the FDI Knowledge Spillovers Puzzle

Smeets¹

2008

The World Bank Research Observer

237

145

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Recent surveys of the empirical literature have concluded that the evidence is mixed on the magnitude, direction, and even existence of knowledge spillovers from foreign direct investment (FDI). This article reviews the recent theoretical and empirical literature that responds to these inconclusive results and considers three main issues: spillover channels, mediating factors, and FDI heterogeneity. Studies that take into account individual spillover channels find robust evidence of knowledge spillovers from FDI. Studies on the importance of mediating factors and FDI heterogeneity are less conclusive and could benefit from greater convergence in methodologies and greater specificity in the spillover channels of interest. More generally, many studies do not properly distinguish between knowledge spillovers and knowledge transfers, and empirical studies seem to greatly outnumber theoretical studies. JEL codes: F23, O33In the face of difficulties associated with capturing spillover effects and the multitude of factors that can influence the extent of spillovers in each economy, we caution researchers about drawing generalized conclusions about the existence of externalities associated with [foreign direct investment] . . . . (Javorcik and Spatareanu 2005, 47) Over the past decade or so a large body of research has examined knowledge spillovers from foreign direct investment (FDI). At several points along the way scholars have paused to take stock of the evidence (Blomström and Kokko 1998;Saggi 2002;Görg and Greenaway 2004). The verdict has largely been inconclusive. Indeed, the empirical inconclusiveness has become so infamous that virtually every study reviewed here begins with this observation as its main motivation. Explanations for the lack of conclusive results have focused on methodological and measurement issues (Görg and Strobl 2001), but this sort of approach has recently been disputed (Lipsey and Sjöholm 2005 The literature has developed in several directions to account for the ambiguity in earlier work. This study reviews these contributions, both theoretical and empirical. To provide some structure in a rapidly expanding field and to identify which approach or combination of approaches is likely to yield the most promising results, the study is structured around three themes. 1 More insight into the conditions under which knowledge spillovers from FDI are most likely to arise is especially important for developing countries. The highly ambiguous evidence to date on the existence of knowledge spillovers from FDI does not seem to warrant the large sums of money spent by governments to attract FDI. 2 After setting the stage in the following section, the article is then structured around figure 1, a representation of the FDI knowledge spillover process and the pieces of the puzzle that may affect it. 3 The section on opening the black box of FDI knowledge spillovers discusses the research on vertical linkages, worker mobility, and demonstration effects. This is followed by a review of the evidence o...

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“…Second, the multinational may decide not to deploy its …rm speci…c assets in the host country for the fear that they may di¤use to competitors, e.g. via personnel movements (as in Siotis 1999). Either one or both of these motives provide a justi…cation for the multinational's choice to use the existing technology in the host market."…”

Section: Cross-border Mandasmentioning

confidence: 99%

Asymmetric effects of trade costs on entry modes: Firm level evidence

Tekin‐Koru

2012

European Economic Review

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Standard foreign direct investment (FDI) theory suggests that falling trade costs should discourage horizontal FDI. Most FDI is horizontal. Yet, the world witnessed an FDI boom in 1990s, a period of striking falls in trade barriers. This paper carries out an empirical analysis with rich, …rm-level data on the activities of Swedish multinationals around the globe in manufacturing sectors from 1987 to 1998 to shed light on this apparent con ‡ict. The analysis is based on the predictions of a recent literature with an industrial organization (IO) angle: Trade costs have asymmetric e¤ects on foreign expansion modes. This view posits that falling trade costs encourage entry realized as mergers and acquisitions (M&As), one of the potential explanations for the con ‡ict between received theory and recent trends in FDI. Empirical results con…rm the …ndings of this recent literature and add to it by testing its extensions.JEL Classi…cation: F21, F23, L2

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Foreign Direct Investment Strategies and Firms' Capabilities

Cited by 49 publications

References 13 publications

Foreign Direct Investment, Competitive Pressure and Spillovers. An Empirical Analysis on Spanish Firm Level Data

Foreign Direct Investment, Competitive Pressure and Spillovers. An Empirical Analysis on Spanish Firm Level Data

Collecting the Pieces of the FDI Knowledge Spillovers Puzzle

Asymmetric effects of trade costs on entry modes: Firm level evidence

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