Do different types of FDI strategies spur productivity and innovation capability growth? Evidence from Taiwanese manufacturing firms
Based on different motivations for engaging in outward FDI, this study divides firms' outward FDI into five types: non-FDI, FDI, defensive only outward FDI, expansive only outward FDI, and both defensive & expansive outward FDI simultaneously, and proposes four hypotheses to evaluate their...
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| Format: | Article |
| Language: | English |
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Vilnius Gediminas Technical University
2014-12-01
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| Series: | Journal of Business Economics and Management |
| Subjects: | |
| Online Access: | https://journals.vgtu.lt/index.php/JBEM/article/view/2651 |
| _version_ | 1811190313119645696 |
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| author | Hui-Lin Lin Yi-Chi Hsiao Eric S. Lin |
| author_facet | Hui-Lin Lin Yi-Chi Hsiao Eric S. Lin |
| author_sort | Hui-Lin Lin |
| collection | DOAJ |
| description | Based on different motivations for engaging in outward FDI, this study divides firms' outward FDI into five types: non-FDI, FDI, defensive only outward FDI, expansive only outward FDI, and both defensive & expansive outward FDI simultaneously, and proposes four hypotheses to evaluate their relative strength in terms of firm productivity and innovation capability. The propensity score matching estimator based on a uniquely compiled Taiwanese manufacturing data set shows that, as firms engage in outward FDI, they have higher productivity growth rates compared to non-FDI firms. As for the further disengagement of the impacts of outward FDI, our empirical results indicate that expansive outward FDI tends to strengthen firms' productivity growth, while such a growth-boosting effect is not statistically significant for defensive outward FDI. Moreover, as far as firms undertaking defensive & expansive outward FDI simultaneously are concerned, we also find a positive and significant impact of outward FDI on productivity growth, but the effect is not as large as that for firms engaging solely in expansive outward FDI. This may imply that defensive outward FDI has some adverse effects on firms' productivity growth. As firm performance is measured by innovation growth, the average treatment effects are all significantly positive regardless of the type of outward FDI strategies. Nevertheless, engaging in defensive outward FDI is less advantageous to innovation growth than the expansionary outward FDI, as well as to defensive & expansive outward FDI simultaneously. |
| first_indexed | 2024-04-11T14:49:32Z |
| format | Article |
| id | doaj.art-7d0d8f4cbea140278ade2833a345f52c |
| institution | Directory Open Access Journal |
| issn | 1611-1699 2029-4433 |
| language | English |
| last_indexed | 2024-04-11T14:49:32Z |
| publishDate | 2014-12-01 |
| publisher | Vilnius Gediminas Technical University |
| record_format | Article |
| series | Journal of Business Economics and Management |
| spelling | doaj.art-7d0d8f4cbea140278ade2833a345f52c2022-12-22T04:17:32ZengVilnius Gediminas Technical UniversityJournal of Business Economics and Management1611-16992029-44332014-12-0116310.3846/16111699.2012.732957Do different types of FDI strategies spur productivity and innovation capability growth? Evidence from Taiwanese manufacturing firmsHui-Lin Lin0Yi-Chi Hsiao1Eric S. Lin2Department of Economics, National Taiwan University, 21 Hsu-Chow Road, Taipei, Taiwan 10055Department of Strategy and Management. National Taiwan University, 21 Hsu-Chow Road, Taipei, Taiwan 10055Department of Economics, National Tsing Hua University, 101, Sec.2, Kuang-Fu Road, Hsin-Chu, Taiwan 30013 Public Economics Research Center, National Taiwan University, 21 Hsu-Chow Road, Taipei, Taiwan 10055Based on different motivations for engaging in outward FDI, this study divides firms' outward FDI into five types: non-FDI, FDI, defensive only outward FDI, expansive only outward FDI, and both defensive & expansive outward FDI simultaneously, and proposes four hypotheses to evaluate their relative strength in terms of firm productivity and innovation capability. The propensity score matching estimator based on a uniquely compiled Taiwanese manufacturing data set shows that, as firms engage in outward FDI, they have higher productivity growth rates compared to non-FDI firms. As for the further disengagement of the impacts of outward FDI, our empirical results indicate that expansive outward FDI tends to strengthen firms' productivity growth, while such a growth-boosting effect is not statistically significant for defensive outward FDI. Moreover, as far as firms undertaking defensive & expansive outward FDI simultaneously are concerned, we also find a positive and significant impact of outward FDI on productivity growth, but the effect is not as large as that for firms engaging solely in expansive outward FDI. This may imply that defensive outward FDI has some adverse effects on firms' productivity growth. As firm performance is measured by innovation growth, the average treatment effects are all significantly positive regardless of the type of outward FDI strategies. Nevertheless, engaging in defensive outward FDI is less advantageous to innovation growth than the expansionary outward FDI, as well as to defensive & expansive outward FDI simultaneously.https://journals.vgtu.lt/index.php/JBEM/article/view/2651outward FDdefensive outward FDIexpansive outward FDItotal factor productivityaverage treatment effectpropensity score matching |
| spellingShingle | Hui-Lin Lin Yi-Chi Hsiao Eric S. Lin Do different types of FDI strategies spur productivity and innovation capability growth? Evidence from Taiwanese manufacturing firms Journal of Business Economics and Management outward FD defensive outward FDI expansive outward FDI total factor productivity average treatment effect propensity score matching |
| title | Do different types of FDI strategies spur productivity and innovation capability growth? Evidence from Taiwanese manufacturing firms |
| title_full | Do different types of FDI strategies spur productivity and innovation capability growth? Evidence from Taiwanese manufacturing firms |
| title_fullStr | Do different types of FDI strategies spur productivity and innovation capability growth? Evidence from Taiwanese manufacturing firms |
| title_full_unstemmed | Do different types of FDI strategies spur productivity and innovation capability growth? Evidence from Taiwanese manufacturing firms |
| title_short | Do different types of FDI strategies spur productivity and innovation capability growth? Evidence from Taiwanese manufacturing firms |
| title_sort | do different types of fdi strategies spur productivity and innovation capability growth evidence from taiwanese manufacturing firms |
| topic | outward FD defensive outward FDI expansive outward FDI total factor productivity average treatment effect propensity score matching |
| url | https://journals.vgtu.lt/index.php/JBEM/article/view/2651 |
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