The Heterogeneity of MNC’ Subsidiaries and Technology Spillovers: Explaining positive and negative effects in emerging economies
Anabel Marin & Subash Sasidharan
#2008-066
Conventional models of multinational corporation (MNC) related
spillovers in host economies assume that they derive from the
technological assets created at the headquarters. Subsidiaries’
activities in the host economy are not given any role in this process.
In this paper, drawing on recent advances in MNC literature, we propose
an alternative model. In this alternative model the local innovative
activity of subsidiaries plays a critical role in accounting for both
the possibility of positive or negative effects. More specifically, we
distinguish between three types of subsidiaries: ‘competence creating’,
‘competence exploiting’ and passive; and explore conceptually and
empirically the spillover effects of each type. Our results confirm our
predictions that, in less advanced contexts such as India, only creative
subsidiaries have a positive effect on host country firms; that
competence exploiting subsidiaries generate negative effects when
domestic firms are more advanced; and passive subsidiaries have no
effects. The implications for theory and policy are discussed.
Key words: Technological spillovers, MNCs, emerging economies,
subsidiaries heterogeneity
JEL code: O3, O4 and O1
UNU-MERIT Working Papers
ISSN 1871-9872