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The Heterogeneity of MNC' Subsidiaries and Technology Spillovers: Explaining positive and negative effects in emerging economies

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  • Marin, Anabel

    (SPRU, University of Sussex)

  • Sasidharan, Subash

    (Indian Institute of Technology)

Abstract

Conventional models of multinational corporation (MNC) related spillovers in host economies assume that they derive from the technological assets created at the headquarters. Subsidiaries' activities in the host economy are not given any role in this process. In this paper, drawing on recent advances in MNC literature, we propose an alternative model. In this alternative model the local innovative activity of subsidiaries plays a critical role in accounting for both the possibility of positive or negative effects. More specifically, we distinguish between three types of subsidiaries: "competence creating", "competence exploiting" and passive; and explore conceptually and empirically the spillover effects of each type. Our results confirm our predictions that, in less advanced contexts such as India, only creative subsidiaries have a positive effect on host country firms; that competence exploiting subsidiaries generate negative effects when domestic firms are more advanced; and passive subsidiaries have no effects. The implications for theory and policy are discussed.

Suggested Citation

  • Marin, Anabel & Sasidharan, Subash, 2008. "The Heterogeneity of MNC' Subsidiaries and Technology Spillovers: Explaining positive and negative effects in emerging economies," MERIT Working Papers 2008-066, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    • Handle: RePEc:unm:unumer:2008066
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    Cited by:

    1. Marin, Anabel & Bell, Martin, 2010. "The local/global integration of MNC subsidiaries and their technological behaviour: Argentina in the late 1990s," Research Policy, Elsevier, vol. 39(7), pages 919-931, September.
    2. Wen-Bin Chuang & Hui-lin Lin & Chien-Wei Wu, 2015. "Does Institutional Quality Strengthen The Positive Influence of Offshore R&D Strategy on the Firm Productivity?," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(2), pages 279-294, February.
    3. Anabel Marin & Ionara Costa, 2010. "Thinking locally: exploring the importance of a subsidiary-centred model of FDI-related spillovers in Brazil," International Journal of Technological Learning, Innovation and Development, Inderscience Enterprises Ltd, vol. 3(1), pages 87-107.
    4. C. Franco, 2009. "Exports and FDI motivations: empirical evidence from US foreign subsidiaries," Working Papers 687, Dipartimento Scienze Economiche, Universita' di Bologna.
    5. Pradeep Kumar Keshari, 2011. "Efficiency Spillovers from FDI in the Indian Machinery Industry: A Firm Level Study Using Panel Data Models," Working Papers id:4195, eSocialSciences.

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    More about this item

    Keywords

    Technological spillovers; MNCs; emerging economies; subsidiaries heterogeneity;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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