Outward foreign direct investment and domestic innovation efforts: Evidence from India
This paper examines the role of outward foreign direct investment (OFDI) by Indian firms on domestic firms' R&D using unique firm-level data for 2008–2018. While correcting for endogeneity arising from the sample selection, we apply panel data models to evaluate the OFDI and domestic R&D nexus. Our empirical analysis highlights the presence of positive impact of OFDI on the firm's decision to undertake R&D activities. Further, we find that irrespective of the mode of OFDI, i.e., both wholly-owned subsidiaries and joint ventures encourages firms to participate in R&D activities. However, only OFDI in the form of wholly-owned subsidiaries increases the R&D intensity of the parent firms' R&D activities.
Reddy, K., Sasidharan, S., & Doytch, N. (2022). Outward foreign direct investment and domestic innovation efforts: Evidence from India. Journal of Economics and Business, 122. https://doi.org/10.1016/j.jeconbus.2022.106084