Heterogeneous MNC subsidiaries and technological spillovers: Explaining positive and negative effects in India

Abstract

One of the most intriguing aspects of the recent empirical literature on FDI-related spillover effects is the increasing identification of mixed results. A few studies, particularly in advanced countries have found positive effects; however, a more common scenario in recent studies is the prevalence of insignificant or even negative effects. This is despite the fact that theory predicts substantial positive effects in association with a supposed technological superiority of MNCs relative to domestic firms, particularly in the context of less advanced countries. In this paper, by distinguishing subsidiaries according to their orientation to carry out creative vs. exploitation activities in the host economy, we are able to distinguish situations with positive and negative spillover effects, and we explain why they may be emerging. More specifically, we find that only subsidiaries that are oriented to technologically creative activities have significant and positive effects in India. In contrast, subsidiaries oriented mostly to technologically exploitative activities generate negative effects in some circumstances. The implications for theory and policy are discussed.

Do Foreign Ownership Modes Matter for FDI Spillovers?

“…The findings reported in this chapter add to the literature that suggests that models of spillovers need further development to enable better identification of spillovers (Crespo and Fontoura, 2007;Marin and Sasidharan, 2010). This study finds that spillovers are contingent on foreign ownership modes of MNEs.…”

Linking workforce diversity in education, technological innovation strategies and firms´ organization

“…On another hand, the evidence about the knowledge diffusion effect of foreign direct investment (FDI) in developing countries shows the relevance of internal capabilities and human resources (Marín and Sasidharan, 2010). Hence, we expect a positive relationship between FDI and innovation propensity, when controlling for WDES.…”

Internationalising Smart Specialisation: Assessment and Issues in the Case of EU New Member States

“…Highly integrated subsidiaries are those that are embedded in both the MNE innovation process and the regional knowledge network. Research shows that this type of subsidiary is a real conduit of knowledge transfer and the source of technology spillovers for the regional economy (Marin and Sasidharan 2010;Cantwell and Ram 2005;Marin and Giuliani 2011). In contrast, from a regional economy perspective, isolated subsidiaries do not operate as a source of technology spillovers.…”