International Reverse Spillover Effects on Parent Firms: Evidences from Emerging-Market MNEs in Developed Markets
European Management Journal, 30, 204-218
Special Issue on ‘Emerging Multinationals: Outward Investment from Emerging and Developing Economies.’
16 Pages Posted: 10 Apr 2010 Last revised: 15 Jun 2014
Date Written: July 8, 2011
Abstract
This study examines whether and to what extent emerging-market multinational enterprises (EM MNEs) can use outward FDI in a developed market to capture knowledge spillovers so as to improve their technological capabilities at home. We refer to this as a “reverse spillover” effect on parent firms, and develop it based on the knowledge-seeking motive for FDI by EM MNEs. Extending previous studies that have identified the knowledge-seeking motive and have also provided some evidence for its validity, our study focuses on the effects of such FDI on technological capabilities of EM MNEs at home. Using a panel dataset of 493 EM MNEs over the period 2000-2008, and controlling for possible endogeneity, we find evidence supporting the reverse spillover effect: EM MNEs that have subsidiaries in host developed markets richer in technological resources (measured by R&D investments and R&D employment) exhibit stronger technological capabilities at home. We discuss the implications of our study for research and practice related to the internationalization of EM MNEs.
Keywords: emerging market, developed market, multinational enterprise, outward FDI, R&D, knowledge spillover, technology transfer
JEL Classification: F21, F23, G11, G34, M16, O19, O31, O32, O33, O34, Y40
Suggested Citation: Suggested Citation
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