Study On The Reverse Technology Spillover Effect Of Chinese OFDI

With increasingly fierce global competition, outward foreign direct investment (OFDI) has become an important means to access advanced technology and participate in global competition for developing countries. OFDI has also become a hot spot in academic research. Although existing research has confirmed theoretically that OFDI is an effective way to obtain foreign advanced technology for developing countries, great controversy still exists regards to whether Chinese OFDI has obtained significant reverse technology spillover effect and promoted technological innovation, of which the main reasons can be summarized as following. First, scholars have generally ignored to incorporate influencing factors of OFDI reverse technology spillover effect into their research frameworks. Second, OFDI of developing countries can bring opportunities to learn advanced foreign technology for the home country, namely technology learning effect, but can also squeeze out independent research and development investment in the home country, namely technology crowding-out effect. It’s the synergy between the two effects that determines the size of reverse technology spillover effect, however most scholars fail to consider the crowding-out effect of OFDI. This study emphasizes the perspective of absorptive capacity to study the theoretical mechanisms of Chinese OFDI reverse technology spillover effect.In the theoretical mechanism section, this study first reviewed existing studies about theoretical mechanisms of OFDI reverse technology spillover effect of developing countries, and underlines that the OFDI reverse technology spillover effect goes through two phases:in the first phase, multinational corporations embed their subsidiaries into the innovation network of host country and subsidiaries obtain foreign advanced technologies and information; in the second phase, subsidiaries transfer the obtained technologies and information back to the parent corporation and the latter digests and absorbs these technologies and information. This study then decomposed the reverse spillover effect into technology studying effect and technology crowding-out effect, and analyzed the mechanisms of action of absorptive capacity on reverse technology spillover effect. This study addressed that under the premise of constant crowding-out effect, the absorptive capacity adjusts the reverse spillover effect by influencing studying effect. Finally, by referring to the international technology condition convergence theory, this study described the absorptive capacity endogenously by technology gap, in order to clarify that technology gap has dual regulation impact on reverse technology spillover effect. On the basis of theoretical mechanisms, this study built an oligopoly market model regarding OFDI reverse technology spillover effect, in order to illustrate those factors mentioned in theoretical study by quantitative means, therefore to support the research framework by rigorous mathematical reasoning.In the dynamic simulation section, this study set micro-level enterprises as simulation subjects. As the subjects move in compliance with preset rulses, the associated values change accordingly. Dynamic simulation helps to connect individual behavior on the microscopic level to group behavior on the macroscopic level, as well as to substantiate the empirical study by theoretical evidences and experimental data. By conducting simulation, this study further discovered that compared to developed countries, whether technology sourcing OFDI of developing countries can acquire significant reverse spillover effect is mostly restrained to the first threshold of technology gap-----inadequate absorptive capacity. Also, because of little OFDI crowding-out effect among developed countries, as long as the technology gap is big enough, OFDI of developed countries can also achieve significant reverse technology spillover effect.In the empirical analysis section, this study tested the theoretical mechanisms by using micro-level enterprise data and macro-level regional data. On the microscopic level, this study used samples from ZEPHYR database regarding cross-border mergers and acquisitions of Chinese high-tech enterprises. The main conclusions of micro-level empirical analysis are:(1) Chinese enterprises gained significant reverse technology spillover effect by cross-border mergers and acquisitions;(2) the greater absorptive capacity an acquirer has, the more significant reverse technology spillover effect it can gain. On the macroscopic level, this study used panel data of OFDI of different regions in China, and carried out empirical test by subgroup regression, adding product-term and panel threshold analysis. The main conclusions of macro-level empirical analysis are:(1) in general, reverse technology spillover effect of OFDI in various regions of China is not significant;(2) reverse technology spillover effect varies greatly in different regions of China;(3) for different regions of China, there is generally an inverted U-shape relationship between their technology gaps to developed countries and the reverse technology spillover effect.