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Foreign Direct Investment and Technology Transfer: Knowledge Spillover in the Manufacturing Sector in Indonesia

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  • Horas Djulius

Abstract

Knowledge spillover, as a form of technology transfer from foreign direct investment (FDI), has frequently been investigated in the contexts of various countries. This study aims to examine whether the availability of labour working for foreign companies could trigger improved productivity of the companies’ domestic workers. It also aims to investigate the horizontal and vertical spillovers that might occur, formally or less formally, and to discover whether specialization and industrial competition play a role in facilitating knowledge spillover in Indonesia’s manufacturing industry. What differentiates this study from previous similar studies is our investigation of whether or not the business orientation and intensity factors of domestic companies could be catalysts for knowledge spillover. To examine this, we use firm-level data and econometrics modelling to test our hypotheses. An important finding of this study is that the export orientation of domestic companies is a critical factor in promoting knowledge spillover.

Suggested Citation

  • Horas Djulius, 2017. "Foreign Direct Investment and Technology Transfer: Knowledge Spillover in the Manufacturing Sector in Indonesia," Global Business Review, International Management Institute, vol. 18(1), pages 57-70, February.
    • Handle: RePEc:sae:globus:v:18:y:2017:i:1:p:57-70
    DOI: 10.1177/0972150916666878
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    Cited by:

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    2. Hu, Dengfeng & You, Kefei & Esiyok, Bulent, 2021. "Foreign direct investment among developing markets and its technological impact on host: Evidence from spatial analysis of Chinese investment in Africa," Technological Forecasting and Social Change, Elsevier, vol. 166(C).
    3. Aggarwal, Sakshi, 2023. "The empirical measurement and determinants of intra-industry trade for a developing country," MPRA Paper 117112, University Library of Munich, Germany.
    4. Bouzayani Rajab & Abida Zouheir, 2024. "Complementarity Relationship Between Foreign Direct Investment, Human Capital Threshold and Economic Growth: State of the 15 Least Developed African Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 7216-7236, June.
    5. Moralles, Herick Fernando & Moreno, Rosina, 2020. "FDI productivity spillovers and absorptive capacity in Brazilian firms: A threshold regression analysis," International Review of Economics & Finance, Elsevier, vol. 70(C), pages 257-272.
    6. Sultana, Nasrin & Turkina, Ekaterina, 2020. "Foreign direct investment, technological advancement, and absorptive capacity: A network analysis," International Business Review, Elsevier, vol. 29(2).
    7. Sakshi Aggarwal & Debashis Chakraborty, 2022. "Which Factors Influence India’s Intra-Industry Trade? Empirical Findings for Select Sectors," Global Business Review, International Management Institute, vol. 23(3), pages 729-755, June.
    8. Chengliang Liu & Qingbin Guo, 2019. "Technology Spillover Effect in China: The Spatiotemporal Evolution and Its Drivers," Sustainability, MDPI, vol. 11(6), pages 1-14, March.
    9. Nigel Raylyn Dsilva, 2022. "Technology Spillovers and Its Mechanisms of Diffusion in Emerging Market Economies: Issues and Challenges," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 14(3), pages 419-433, September.

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