Home court advantage? Knowledge-based FDI and spillovers in emerging economies
Date
2019
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Article
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18 p.
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Abstract
Research Summary: Emerging economies increasingly try to stimulate innovation as a path toward economic development. One side effect of this is that foreign ownership
of innovation in these contexts is increasing. This raises the question of how local vs. foreign ownership affects whether spillovers from innovation stay in the focal country or occur outside of it. Based on data from 1995 to 2014 across 35 emerging economies, we find that when ownership of an invention is local, spillovers are more likely to stay local. We also examine how the relationship between foreign ownership and spillovers is moderated by the stickiness of knowledge associated with the invention (relevant country-level knowledge stocks in the host country, applied orientation, and scope). We conclude
with a discussion of theory and policy implications.
Managerial Summary: Stimulating innovation is increasingly perceived as important in emerging economies. As a result, leaders in these economies work to increase foreign
direct investment in innovation-related activities with the hope that these activities will encourage knowledge spillovers locally and, thus, stimulate greater economic development. The effect of foreign ownership of innovations is not yet well understood, though. In this study, we examine where the spillovers from foreign vs. locally owned inventions accrue. We find that when the ownership of an invention is local, the benefits from that invention are more likely to stay local. We also find that the technology characteristics of an invention influence the relationship between foreign ownership and spillovers. We conclude with a discussion of implications for theory and innovation policy.
Description
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Citation
Global Strategy Journal. 2019; 9: 405– 422.
Keywords
Emerging markets, Innovation, Knowledge, Patents, Value appropriation