Abstract
Deploying knowledge from Inwards Foreign Direct Investment (IFDI) has been becoming essential for host countries in gaining and developing their competitive advantages, which has been become one of vitally important driving forces for the development of firms in the future.
Purpose: This study aims to examine whether and how the Chinese’s IFDI affects the regional innovation performance using a panel data of Chinese’s FDI in the UK, and explore the role of Knowledge Transfer (KT) in the innovation.
Design/methodology/approach: The system Generalized Method of Moments(GMM) estimation method is chose to correct for the endogeneity of the dependent variable. An empirical analysis is conducted to test the effects of Chinese FDI on the innovation in 12 regions of the UK over the period of 2010-2020.
Findings: The empirical results show that the Chinese’s IFDI has significantly positive impacts on the regional innovation performance in the UK and three variables---R&D intensity (RDI), absorptive capacity (ACS) and Trade present negative effects. On the basis of these results and related opinions in the literature, this study concludes that "do not take the effects of FDI for granted”. FDI just provides a platform for cooperation and KT. The real effects of FDI depend on different context and policies. It also concludes innovation factors completeness view with the results.
Research limitations/implications: This research is not without limitations. First, it failed to take account of the management innovation and theoretical innovation in the quantitative study due to data limitations. Future research can consider both innovations in the models and find methods to measure or evaluate them, which may present different pictures. Second, it did not further explore in detail the cultural perspectives and political risks in the study. Expanding the scope of the study will produce more comprehensive understanding of the effects of FDI on innovation and thus our empirical results would be changed accordingly. Therefore, future research could pay more attention on how to take advantage of the FDI to improve cooperation in the innovation among companies with different cultures.
Originality/value: Firstly, the empirical findings in the study provide evidences for the significant positive impacts of IFDI on the regional innovation performance for the extended period until 2020. Secondly, The research presents evidences for Organizational Diversity theory and Information decision making theory by utilizing them in the process of KT and innovation development experienced by MNEs. Thirdly, the study concludes that “FDI as a platform for KT and innovation” and “Innovation factors completeness view” on the basis of results. The research presents evidences for Organizational Diversity theory and Information decision making theory and extends the theories by utilizing them in the process of KT and innovation development experienced by MNEs. Finally, the research examines the role China’s FDI plays in mediating and boosting KT and innovation, but does so in a very different economic context of UK, rather than in a developing country. It further extends the existing researches and research areas in the relevant literature.
Key words: Foreign direct investment (FDI), Innovation, Knowledge transfer (KT), China, UK
Purpose: This study aims to examine whether and how the Chinese’s IFDI affects the regional innovation performance using a panel data of Chinese’s FDI in the UK, and explore the role of Knowledge Transfer (KT) in the innovation.
Design/methodology/approach: The system Generalized Method of Moments(GMM) estimation method is chose to correct for the endogeneity of the dependent variable. An empirical analysis is conducted to test the effects of Chinese FDI on the innovation in 12 regions of the UK over the period of 2010-2020.
Findings: The empirical results show that the Chinese’s IFDI has significantly positive impacts on the regional innovation performance in the UK and three variables---R&D intensity (RDI), absorptive capacity (ACS) and Trade present negative effects. On the basis of these results and related opinions in the literature, this study concludes that "do not take the effects of FDI for granted”. FDI just provides a platform for cooperation and KT. The real effects of FDI depend on different context and policies. It also concludes innovation factors completeness view with the results.
Research limitations/implications: This research is not without limitations. First, it failed to take account of the management innovation and theoretical innovation in the quantitative study due to data limitations. Future research can consider both innovations in the models and find methods to measure or evaluate them, which may present different pictures. Second, it did not further explore in detail the cultural perspectives and political risks in the study. Expanding the scope of the study will produce more comprehensive understanding of the effects of FDI on innovation and thus our empirical results would be changed accordingly. Therefore, future research could pay more attention on how to take advantage of the FDI to improve cooperation in the innovation among companies with different cultures.
Originality/value: Firstly, the empirical findings in the study provide evidences for the significant positive impacts of IFDI on the regional innovation performance for the extended period until 2020. Secondly, The research presents evidences for Organizational Diversity theory and Information decision making theory by utilizing them in the process of KT and innovation development experienced by MNEs. Thirdly, the study concludes that “FDI as a platform for KT and innovation” and “Innovation factors completeness view” on the basis of results. The research presents evidences for Organizational Diversity theory and Information decision making theory and extends the theories by utilizing them in the process of KT and innovation development experienced by MNEs. Finally, the research examines the role China’s FDI plays in mediating and boosting KT and innovation, but does so in a very different economic context of UK, rather than in a developing country. It further extends the existing researches and research areas in the relevant literature.
Key words: Foreign direct investment (FDI), Innovation, Knowledge transfer (KT), China, UK
| Original language | English |
|---|---|
| Title of host publication | British Accounting and Finance Association (BAFA) annual conference |
| Publication status | Published - 9 Apr 2024 |
| Event | BAFA Annual Conference with Doctoral Masterclasses - University of Portsmouth, Portsmouth, United Kingdom Duration: 8 Apr 2024 → 10 Apr 2024 https://eaa-online.org/arc/events/bafa-annual-conference-with-doctoral-masterclasses/ |
Conference
| Conference | BAFA Annual Conference with Doctoral Masterclasses |
|---|---|
| Country/Territory | United Kingdom |
| City | Portsmouth |
| Period | 8/04/24 → 10/04/24 |
| Internet address |