Fdi spillovers between manufacturing-service sectors: myth or reality?
Main Article Content
Abstract
There is a rich body of research on FDI spillovers, however, the findings are not conclusive. The mixed results suggest that FDI spillovers may come from different sources other than three mostly mentioned in literature (i.e. demonstration, competition, and employee movement). This paper proposes that the external effects also happen between different sectors. Put differently, local manufacturing firms can be, either positively or negatively, impacted by foreign service firms; and local service firms can be, in the same vein, affected by foreign manufacturing firms. The mechanism for this is described via three new channels: servitization, manufacturization, and knowledge-intensitve business service. The findings show that there exists FDI spillovers between manufacturing and service sectors.
Keywords: FDI spillovers, servitization, manufacturization, knowledge-intensive business service.
Article Details
Keywords
FDI spillovers, servitization, manufacturization, knowledge-intensive business service
References
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2. Antonelli, C. (1998). Localizad technological change, new information technology and the knowledge and the knowledge-based economy: the European evidence. Journal of Evolutionary Economics, 8, 177-198.
3. Baines, T., Lightfoot, H., Peppard, J., Johnson, M., Tiwari, A., Shehab, E. & Swink, M. (2009). Towards an operations strategy for product-centric servitization. International Journal of Operations & Production Management, 29(5), 494-519.
4. Barbosa, N. & Eiriz, V. (2009). Linking corporate productivity to foreign direct investment: An empirical assessment. International Business Review, 18, 1–13.
5. Baumol, W.J. Bate Blackman, S.A. & Wolff, E.N. (1989). Productivity and American leadership, Cambridge: the mit Press.
6. Blomström, M. & Persson, H. (1983). Foreign investment and spillover efficiency in an underdeveloped economy: Evidence from the mexican manufacturing industry, World Development, 116, 493-501.
7. Buckley, P.J., Clegg, J. & Wang, C. (2006). Inward FDI and host country productivity evidence from China’s electronics industry. Transnational Corporations, 15(1), 13-37.
8. Chang, K-C. & Tarn, D. (2008). Does Service Tangibilization Work in the Hotel Industry? An Experimental investigation, Asia Pacific Journal of Tourism Research, 13(4), 411- 434.
9. Corrocher N., Cusmano L. & Morrison, A. (2009). Modes of innovation in knowledgeintensive business services. Evidence from Lombardy. Journal of Evolutionary Economics, 19(2), 173-196.
10. Daniels, P.W. & Bryson, J.R. (2002). Manufacturing Services and Servicing Manufacturing:
changing forms of production in advanced capitalist economies, Urban Studies, 39(5/6), 977– 991.
11. den Hertog, P. (2000). Knowledge-Intensive Business Services as Co-Producers of innovation. International Journal of Innovation Management, 4, 491-528.
12. Djankov, S. & Hoekman. B. (2000). Foreign Investment and Productivity Growth in Czech Enterprises, World Bank Economic Review, 14(1), 49-64.
13. Eapen, A. (2012). Social structure and technology spillovers from foreign to domestic firms, Journal of International Business Studies, 43(3), 244-263.
14. García-Quevedo, J. & Mas-Verdu, F. (2008). Does only size matter in the use of knowledge intensive services? Small Business Economics, 31, 137-146.
15. Gebauer, H. & Friedli, T. (2005). Behavioural implications of the transition process from products to services. Journal of Business and Industrial Marketing, 20(2), 70-80.
16. Gebauer, H., Friedli, T. & Fleisch, E. (2006). Success factors for achieving high service revenues in manufacturing companies. Benchmarking: An International Journal, 13(3), 374-386.
17. Globerman, S. (1979). Foreign direct investment and spillover efficiency benefits in Canadian manufacturing industries, Canadian Journal of Economics, 12, 42-56.
18. Görg, H. & Greenaway, D. (2004). Much ado about nothing? Do domestic firms really benefit from foreign direct investment? World Bank Research Observer, 19, 171-197.
19. He, J. & Wang, H.C. (2009). Innovative knowledge assets and economic performance: the asymmetric roles of incentives and monitoring. Academy of Management Journal, 52(5), 919-938.
20. Hipp, C. & Grupp, H. (2005). Innovation in the service sector: The demand for servicespecific innovation measurement concepts and typologies. Research Policy, 34, 517–535.
21. Javorcik, B. S. (2004). Does foreign direct investment increase the productivity of domestic firms? In search of spillovers through backward linkages. American Economic Review, 94(3), 605–627.
22. Kafouros, M.I. & Buckley, P.J. (2008). Under what conditions do firms benefit from the research efforts of other organisations? Research policy, 37, 225-239.
23. Kafouros, M.I., Buckley, P. & Clegg, J. (2012). The effects of global knowledge reservoirs on the productivity of multinational enterprises: the role of international depth and breadth. Research Policy, 41, 848–861.
24. Kokko, A. (1994). technology, market characterristics, and spillovers, Journal of Development Economics, 43, 279-293.
25. Levitt T., (1981). Marketing intangible products and product intangibles. Harvard Business Review, May/June, 92 – 104.
26. Liu, X., Wang, C. & Wei, Y. (2009). Do local manufacturing firms benefit from transactional linkages with multinational enterprises in China? Journal of International Business Studies, 40(7). 1113-1130.
27. McQuarrie, E. F. & Phillips, B. J. (2005). Indirect persuasion in advertising: How consumers process metaphors presented in pictures and words. Journal of Advertising, 34(2), 7–20.
28. Miles, I. (2005). Knowledge-intensive business services: prospects and policies. Foresight, 7(6), 39-63.
29. Miles, I., Kastrinos, N., Bilderbeek, R., den Hertog, P., Flanagan, K. & Huntink, W. (1995). Knowledge-intensive business services: their role as users, carriers and sources of innovation. Report to the EC DG XIII Luxembourg: Sprint EimS Programme.
30. Miller D., Hope, Q., Eisenstat, R., Foote, N. & Galbraith, J. (2002). The problem of solutions: balancing clients and capabilities. Business Horizons, march / April, 3-12.
31. Miozzo, M. & Grimshaw, D. (2008). Service multinationals and forward linkages with client firms: The case of IT outsourcing in Argentina and Brazil. International Business Review, 17, 8–27.
32. Mors, M. L. (2010). Innovation in a global consulting firm: When the problem is too much diversity. Strategic Management Journal, 31(8), 841–872.
33. OECD (1992). Industrial policy in OECD countries annual review 1992, Organisation for Economic Cooperation and development.
34. Oliva R. & Kallenberg R. (2003). Managing the Transition from Products to Services. International Journal of Service Industry Management, 14(2), 1 -10.
35. Parasuraman, A., Zeithmal V.A. & Berry, L.L. (1988) SERVQUAL: a multiple-item scale for measuring consumer perceptions of service quality. Journal of Retailing, 64(1), 12–40.
36. Pisano, G. P. & Shih, W. C. (2009). Restoring American competitiveness. Harvard Business Review, July-August, 114-125.
37. Schmenner, R.W. (2009). Manufacturing, service, and their integration: some history and theory, International Journal of Operations & Production Management, 29(5), 431-443.
38. Sundbo, J. (1994). modulization of service production and a thesis of convergence between service and manufacturing organizations. Scandinavian Journal of Management, 10(3), 245-266.
39. Tarn, D. (2005). Marketing-based tangibilisation for services, The Service Industries Journal, 25(6), 747-772.
40. Wang, Y. & Blomström, m. (1992). Foreign investment and technology transfer: A simple model. European Economic Review, 36, 137-55.
41. Wise, R. & Baumgartner, P. (1999). Go downstream: The New Profit Imperative in manufacturing, Harvard Business Review, Sept/Oct., 133 - 141.
42. Wooldridge, J.M. (2002). Econometric Analysis of Cross Section and Panel Data. Cambridge, mA: mit Press.
43. Yudaeva, K., Kozlov, K., Melentieva, N., & Ponomaryova, N. (2003). Does foreign ownership matter? Russian experience, Economics of Transition, 11(3), 383-409.