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

See all articles by Victor Zitian Chen

Victor Zitian Chen

University of North Carolina, Charlotte; University of North Carolina (UNC) at Charlotte - The Belk College of Business Administration

Jing Li

Simon Fraser University

Daniel M. Shapiro

Simon Fraser University (SFU) - Policy Analysis Area

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

Chen, Victor Zitian and Li, Jing and Shapiro, Daniel, International Reverse Spillover Effects on Parent Firms: Evidences from Emerging-Market MNEs in Developed Markets (July 8, 2011). European Management Journal, 30, 204-218, Special Issue on ‘Emerging Multinationals: Outward Investment from Emerging and Developing Economies.’ , Available at SSRN: https://ssrn.com/abstract=1585049

Victor Zitian Chen (Contact Author)

University of North Carolina, Charlotte ( email )

The Belk College of Business
Charlotte, NC 28223

HOME PAGE: http://www.ChenZitian.com/

University of North Carolina (UNC) at Charlotte - The Belk College of Business Administration ( email )

The Belk College of Business
Charlotte, NC 28223

HOME PAGE: http://www.ChenZitian.com/

Jing Li

Simon Fraser University ( email )

8888 University Drive
Burnaby, British Colombia V5A 1S6
Canada

Daniel Shapiro

Simon Fraser University (SFU) - Policy Analysis Area ( email )

Room 2400 - 515 West Hastings St.
Burnaby, British Columbia V5A 1S6
Canada
604-291-5155 (Phone)
604-291-5122 (Fax)

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