The Study on Effects of Foreign Ownership on Innovation

Abstract

In developing countries, government actively promotes foreign investment in order to adapt the new and latest technology. This leads to greater R&D activities, thus this creates knowledge and technology spillover. In this paper, we look at Korea where the R&D has been the main factor of rapid growth. We study the effects of foreign ownership on technological performance by looking at 756 R&D intensive Korean firms from 1999 to 2009. We look the number of applied and registered patents are dependent variables (as a technological performance) and observe statistically significant and positive correlation with foreign ownership due to three main reasons: (a) knowledge and technology spillover, (b) relatively more risk-taking investment behavior of institutional investors, and (c) cherry-picking strategy of investing in firms that perform well. Furthermore, we also observe the R&D expenditure has a strong and positive correlation with the number of applied and registered patents, and R&D expenditure could serve as a proxy variable for technologically advanced industries. Lastly, we observe that the coefficients increase for applied and registered patents for different technology index sub-groups.

The Role of Domestic and Foreign Knowledge Inflows on the Relationship between R&D Portfolio Mix and Innovation Outcomes: An Empirical Study of Manufacturing Firms in an Emerging Economy*

“…This result also informs the international business literature that reports mixed findings on the effects of foreign ownership on local innovation performance (Love, Ashcroft, & Dunlop, ; Lee & Yang, ). Lee and Yang (), for instance, found that foreign ownership structures had a significant effect on a local firm's ability to innovate, while other studies found otherwise (e.g., Knell & Srholec, ). It is quite possible that these mixed results could be due to the lack of detailed investigation on the type of R&D activity performed by the local firm.…”

“…Specifically, local firms may lose the opportunity to access the foreign technologies when the MNCs hesitate to share their knowledge. Instead, it is more likely for MNCs to transfer foreign knowledge to local businesses when they have equity investments through varying degrees of ownership stake in local firms (Djankov & Hoekman, ; Javorcik, ; Lee & Yang, ). By foreign knowledge, we refer to the product and process knowledge developed overseas accessible through FDIs from MNCs (Blomström & Sjöholm, ; Sasidharan & Kathuria, ).…”

Innovatívabbak-e a termelékeny és az exportáló vállalatok? Egy magyar feldolgozóipari minta elemzése

“…Ezt a különbséget Falk az új tagországok külföldi tulajdonú cégeinek alacsonyabb átlagéletkorával magyarázta. Lee-Yang [2016] a kilencvenes évek eleje és a kétezres évek eleje közötti időszakot felölelő dél-koreai minta alapján pozitív összefüggést talált a külföldi tulajdon és az innovációs teljesítmény között (amit a szabadalmak számával mért). Ezt a szerzőpáros azzal indokolta, hogy a fejlett országokból egyre több magasan kvalifikált befektető érkezett a kezdeti időszakban a még viszonylag fejletlenebbnek számító országba, és hozott fejlett technológiát, ami több K + F-tevékenységhez és a bejegyzett szabadalmak számának növekedéséhez vezetett.…”