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The paradox of knowledge-seeking FDI in emerging countries : The role of value innovation capabilities in resource-constrained markets

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abstract Extant literature on knowledge-seeking foreign direct investment (FDI) argues that multinationals from developed countries establish overseas subsidiaries to acquire new technological know-how. In recent times, this is particularly true for emerging countries which have enjoyed a large amount of inflow FDI caused by the attempts of multinationals from developed countries to expand their business. However, at the same time, literature acknowledges that multinationals from emerging countries still possess underdeveloped technological capabilities relative to developed country multinationals, resulting in a paradoxical perception of knowledge-seeking FDI. This research idea sets out to resolve this paradox by focusing on specific advantages that local multinationals in emerging countries might have over their developed country competitors. We propose that value innovation capabilities – the firm's ability to design 'good-enough', affordable products – are absent in the capability base of developed country multinationals but present vital capabilities in resource-constrained markets. We aim to support our argument by providing empirical evidence.
   
type conference paper (English)
   
keywords
   
name of conference 53nd Annual Meeting of the Academy of International Business Conference (Nagoya, Japan)
date of conference 24-6-2011
title of proceedings AIB 2011: International Business for Sustainable World Development
publisher Academy of International Business (East Lansing, MI)
ISSN 2078-0435
review double-blind review
   
citation Zeschky, M. (2011). The paradox of knowledge-seeking FDI in emerging countries: The role of value innovation capabilities in resource-constrained markets. In AIB 2011: International Business for Sustainable World Development. East Lansing, MI: Academy of International Business.