Risk and the technology content of FDI: A dynamic model

Chang, Pao‐Li; Lu, Chun-Shien

doi:10.1016/j.jinteco.2011.09.001

Cited by 10 publications

(3 citation statements)

References 35 publications

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“…Most of the models analysing the knowledge transmission from FDI firms have overlooked the risk involved in the FDI decision. Chang and Lu () have lately considered risk in their model: the failure of FDI in the South would increase with the technology content of FDI and the South's distance to the technological frontier ( DTF ). With this formulation, they show that only intermediate technology FDI is undertaken, once a minimum technology level is reached.…”

Section: Review Of Related Literaturementioning

confidence: 99%

Foreign Direct Investment and Total Factor Productivity Growth: New Macro‐Evidence

Baltabaev

2013

World Economy

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Although the role of foreign direct investment (FDI) in facilitating technology transfer is well known in the literature, empirical evidence regarding the effect of FDI on growth is mixed. The contradictory results in the literature may be due to the failure to account for endogeneity and for the abortive capacity of the hosting countries. Using panel data for 49 countries over the period 1974–2008 and the existence of Investment Promotion Agencies in the receiving countries as an instrument, our results show that increased FDI stock leads to higher productivity growth. We also find a significant positive effect on the interaction between FDI stock and distance to the technological frontier, suggesting that the ability of technologically backward countries in absorbing technologies developed at the frontiers increases as more FDI stock is accumulated.

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Section: Review Of Related Literaturementioning

confidence: 99%

Foreign Direct Investment and Total Factor Productivity Growth: New Macro‐Evidence

Baltabaev

2013

World Economy

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“…ROE has been widely used in the literature (e.g. Beugelsdijk et al, 2018;Chang & Lu, 2012;Shirodkar & Konara, 2017).…”

Section: Key Variablesmentioning

confidence: 99%

“…ROE has been widely used in the literature (e.g. Beugelsdijk et al, 2018;Chang and Lu, 2012;Shirodkar and Konara, 2017). Language overlap (LO) is measured as the incidence of the home country's dominant language(s) in the host country (i.e.…”

Section: Key Variablesmentioning

confidence: 99%

Does language matter to foreign subsidiary performance?

Konara

Wei

2020

IMR

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PurposeThis paper examines the role of language in foreign subsidiary performance.Design/methodology/approachWe develop hypotheses relating to the effects of language difference and its interplay with cultural distance and market size. Considering languages that can be directly used and that can be acquired by MNEs, we employ language variables representing major languages and a population of 60 home and 57 host countries to study the performance of a sample of 1,751 subsidiaries between 2002 and 2013.FindingsLanguage difference is found to have a negative impact on subsidiary performance. The positive effects of cultural distance on performance become stronger when the language difference is smaller. The language effects are also more pronounced in small markets.Practical implicationsThis study reveals that subsidiary success depends on language difference, and such effects are more pronounced in small markets. The results also suggest that MNEs need to give more attention to bridging language barriers when they invest in culturally distant countries so that they can benefit from the positive effects of cultural distance.Originality/valueGiven that there is no systematic research investigating the role of language in the foreign subsidiary performance of MNEs, we make an important contribution by presenting a quantitative investigation of the language–performance relationship. The novelty of the paper also lies in examining the interplay of language difference with cultural distance and market size.

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Why has China invested heavily in countries with weak market environments? A new explanation and implications for China-Africa economic cooperation

Luo,

Chen

2024

China Economic Review

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Risk and the technology content of FDI: A dynamic model

Cited by 10 publications

References 35 publications

Foreign Direct Investment and Total Factor Productivity Growth: New Macro‐Evidence

Foreign Direct Investment and Total Factor Productivity Growth: New Macro‐Evidence

Does language matter to foreign subsidiary performance?

Why has China invested heavily in countries with weak market environments? A new explanation and implications for China-Africa economic cooperation

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