Bring institutions into FDI spillover research: Exploring the impact of ownership restructuring and institutional development in emerging economiesXiao, Shufeng (Simon) and Byung Il Park International Business Review, 2018, vol. 27, issue 1, 289-308 Abstract: Extant studies exploring the influences of foreign direct investment (FDI) spillovers on the productivity of local firms have provided conflicting evidence. In particular, they have largely overlooked the important role of institutional mechanisms in the host market in understanding the sources of the variation in FDI spillover effects on the productivity of local firms, especially in the context of emerging markets. Using a comprehensive panel data set of manufacturing firms in China during 1998–2007, our paper presents an integrative framework of how FDI spillovers affect the productivity of local firms in emerging markets. We identify an inverted U-shaped relationship between FDI spillovers and the productivity of local firms in China. This result suggests the coexistence of and the interplay between the opposing mechanisms of FDI spillover learning opportunity and adverse competition. Drawing on the institution-based view, this study also develops contingency frameworks and arguments to explore the question of if FDI spillover effects are contingent on, or independent of, a local institutional context especially in emerging markets. We find that institutional mechanisms, such as the institutionally determined ownership restructuring and the different levels of subnational institutional development within the host emerging market, significantly shape the variation of FDI spillover effects on the productivity of local firms. This research highlights the importance of incorporating institutional effects in understanding the FDI spillover effects in emerging markets. Keywords: FDI spillovers; Institutions; Ownership restructuring; Institutional development; Emerging economies; China (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:iburev:v:27:y:2018:i:1:p:289-308 Ordering information: This journal article can be ordered from DOI: 10.1016/j.ibusrev.2017.08.004 Access Statistics for this article International Business Review is currently edited by P. Ghauri More articles in International Business Review from Elsevier |
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