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Foreign Direct Investment Entry Modes, Development and Technological Spillovers
Author(s) -
Alvarez Isabel,
Marin Raquel,
SantosArteaga Francisco J.
Publication year - 2015
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/manc.12074
Subject(s) - multinational corporation , industrial organization , foreign direct investment , business , subsidiary , greenfield project , investment (military) , reciprocal , economics , economic system , economic geography , international trade , finance , linguistics , philosophy , politics , political science , law , macroeconomics
This paper illustrates how wholly owned entry modes of multinational companies ( MNCs ) are jointly determined by both the strategic objectives of the MNC and the local firms' assets in the creation of value. In particular, the entry mode chosen is based on the potential reciprocal technological spillovers between local firms and MNC subsidiaries. M & A s are preferred when host countries exhibit a certain level of development in their local systems of innovation, especially for technologically leading MNCs . Otherwise, for technological laggard MNCs , greenfield investments prevail and M & A s may be carried out for meeting demand motives in developing local systems of innovation.