The impact of Inward FDI on Host country: Firm Performance in New Zealand

<p>Foreign direct investment (FDI) and its multinationals' activities are well accepted as an engine of growth by which a host country can benefit from the injection of capital investment, technology and managerial knowhow to build up indigenous competitiveness through spillovers effects and productivity gap between foreign affiliates and local firms New Zealand is a small but developed economy. FDI plays an important role in the development and growth of local industry in New Zealand. In the extant literature, there was very few studies research on the performance gap in New Zealand context. This paper investigates the effect of inward FDI on host country theoretically, focusing on the spillover effects and firm performance. Statistical analysis tests the possibility of performance gap's existence in New Zealand firms. In addition, separated attention is provided to service industry to differ from manufacturing industries that always be testified in many empirical studies. The findings provide evidence that foreign owned firms have superior performance advantages over local firms. But more research needs to be conducted for more conclusive results.</p>

The impact of Inward FDI on Host country: Firm Performance in New Zealand

<p>Foreign direct investment (FDI) and its multinationals' activities are well accepted as an engine of growth by which a host country can benefit from the injection of capital investment, technology and managerial knowhow to build up indigenous competitiveness through spillovers effects and productivity gap between foreign affiliates and local firms New Zealand is a small but developed economy. FDI plays an important role in the development and growth of local industry in New Zealand. In the extant literature, there was very few studies research on the performance gap in New Zealand context. This paper investigates the effect of inward FDI on host country theoretically, focusing on the spillover effects and firm performance. Statistical analysis tests the possibility of performance gap's existence in New Zealand firms. In addition, separated attention is provided to service industry to differ from manufacturing industries that always be testified in many empirical studies. The findings provide evidence that foreign owned firms have superior performance advantages over local firms. But more research needs to be conducted for more conclusive results.</p>

How do human capital and R&D structure facilitate FDI knowledge spillovers to local firm innovation? a panel threshold approach

This paper examines how local firms’ structure of human capital and R&D strategies influence their absorption of FDI knowledge spillovers. Using a unique dataset of Chinese firms in Beijing Zhongguancun Science Park from 2009 to 2015, our panel endogenous threshold models confirm two thresholds for human capital diversity and one threshold for R&D diversity in facilitating FDI spillovers. When human capital diversity is below its second threshold, FDI presence positively influences local firms’ innovation performance; while above the second threshold, the FDI turns to an insignificant impact. Besides, when R&D diversity is below its single threshold, FDI spillovers are positively associated with local firms’ innovation; otherwise, the effect of FDI is insignificantly negative. Our findings highlight the importance of human capital and R&D structures in local firms’ absorptive capacity. Local organizations need to keep diversifying their human capital and R&D strategies to learn from FDI knowledge but avoid allocating their efforts evenly upon sub-categories within the two resources.

Does foreign direct investment influence R&D activity in the host country? Evidence from Vietnam

PurposeThis study focuses on the linkages between foreign direct investment and the research and development (R&D) and innovation activity of domestic enterprises in Vietnam.Design/methodology/approachThe Heckman selection model approach is applied to a panel dataset of nearly 7,000 Vietnamese firms for the 2011–2015 study period to investigate the impact of foreign presence on the R&D of local firms through horizontal and vertical linkages. Probit model estimation is employed to examine how foreign investment influences the innovation activity of local companies.FindingsWhile there are a small number of firms carrying out R&D activities in Vietnam, foreign or joint domestic–foreign venture firms are less inclined than domestic firms to undertake R&D. Domestic factors that include capital, labor quality, location and export status of firm have a significant effect on the decision of domestic firms to participate in R&D activity. Only forward linkages and the gross firm output are found to have an impact on the R&D intensity of domestic enterprises, while other factors appear to have no significant influence on how much firms spend on R&D activities.Practical implicationsIn order to promote the R&D activity of domestic firms, policy should focus on (1) the backward linkages between local firms in downstream sectors with their foreign suppliers in upstream sectors, and (2) the internal factors such as labor, capital or location that affect the decisions made by domestic firms.Originality/valueGiven that foreign investment may affect R&D and innovation activity of local firms in host countries, the impact is relatively unexplored for many emerging economies and not so in the case of Vietnam. The availability of a unique survey on Vietnamese firm technology and competitiveness provides the opportunity to address this gap in the literature.