Innovation and Creativity
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Innovation and Creativity

Pillars of the Future Global Economy

Edited by Filip De Beule and Ysabel Nauwelaerts

This book brings together different insights into the importance of innovation and creativity to build competitiveness in the European industry and society from different angles.
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Chapter 8: FDI motives and host country productivity effects of US MNEs

John Cantwell and Roger Smeets


The cumulative ambiguity in empirical results regarding the productivity-enhancing effects of inward Foreign Direct Investment (FDI) or spillovers has led scholars to start investigating such effects in more detail (Smeets, 2008). Some studies try to disentangle the knowledge diffusion channels through which such effects allegedly take place (Javorcik, 2004; Görg and Strobl, 2005), while others have considered the moderating role of factors such as the absorptive capacity of local firms (Girma, 2005; Girma and Görg, 2007) or the geography of inter-firm patterns of location (Barrios et al., 2006; Nicolini and Resmini, 2007). A more recent stream of literature has approached the issue by acknowledging the fact that multinationals (MNEs) and their foreign subsidiaries are not homogeneous, and as such may generate different (productivity) effects on host-country firms (Feinberg and Keane, 2005). In this vein, some authors have investigated the influence of differences in MNE ownership structures (Javorcik and Spatareanu, 2008), parent nationality (Buckley et al., 2007a and 2007b) and market orientation (Girma et al., 2008; Smeets and Wei, 2010).

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