The Quest for Innovation and Sustainability
Edited by Wilfred Dolfsma, Geert Duysters and Ionara Costa
Chapter 2: The Innovativeness of Foreign Firms in China
Branka Urem, Ludovico Alcorta and Tongliang An INTRODUCTION While the traditional literature on the role of multinationals in innovation in host countries has emphasized the significance of multinationals in international technology transfer, the emphasis of recent literature has been on the increasing role of multinationals in the generation of innovations in host countries. Consistent with these developments it seems important to raise the issue of the impact of foreign ownership on the novelty of innovations in host countries. The research on the novelty of innovations in relationship to the nationality of ownership is recent and relatively limited. Existing studies typically make a distinction between two levels of novelty, innovations new to the firm and innovations new to the market, consistent with the distinctions suggested by the Oslo Manual (OECD, 2005) and adopted in the European Community Innovation Survey (CIS). The focus is typically on the impact of foreign ownership on innovations new to the market, as a high level of novelty, and on propensity indicators. In the case of developed countries, there are several studies based on CIS data, but evidence on the impact of foreign ownership is mixed. Sadowsky and Sadowsky-Rasters (2006) report a positive impact among firms in the Netherlands that include both innovators and non-innovators but, among innovators only, they find no impact or a negative impact when controlling for sources of innovation. Dachs et al. (2007), in a group of five small European countries, detect a positive impact of at least one category of foreign firms...
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