Unveiling the role of different types of local absorptive capacity: The effects of inward FDI spillovers on regional innovation

Author(s)

Garcia, Renato ; Araujo, Veneziano ; Mascarini, Suelene ; Santos, Emerson Gomes ; Costa, Ariana ; Ferreira, Sarah

• Document type: Journal article
• Source: PAPERS IN REGIONAL SCIENCE; v. 103, n. 5, p. 13-pg., 2024-08-21.

Abstract

The aim of our paper is to examine the role of different types of local absorptive capacity in moderating the relation between inward FDI spillovers and regional innovation. We use data on the investments of multinational companies (MNCs) in Brazilian regions from 2003 to 2014, linking them to regional innovative performance. Our results reveal that the transfer of technological knowledge from MNCs to local firms cannot be taken for granted since the positive effects of inward FDI spillovers on regional innovation occur when the new knowledge provided by inward FDI can be associated with the existing capabilities of local actors. The different types of absorptive capacity among local actors have diverse effects on their ability to benefit from inward FDI spillovers. Our findings reveal the distinct moderating effects of firm and local institutions capabilities, indicating that firms' absorptive capacity can derive greater benefits from the new knowledge provided by inward FDI. Finally, our study provides new empirical evidence of inward FDI spillovers and sheds new light on regional FDI attraction policies. (AU)

• FAPESP's process: 19/03911-0 - Public Funding, Degree of Novelty and Regional Innovation
• Grantee: Suelene Mascarini de Souza Romero
• Support Opportunities: Scholarships in Brazil - Post-Doctoral
• FAPESP's process: 21/02261-2 - Geography of innovation and the formation of innovation hotspots in Brazil: conceptual framework, empirical analysis, and policy
• Grantee: Renato de Castro Garcia
• Support Opportunities: Regular Research Grants