The Role Of Foreign Direct Investment Dynamic Entry In Domestic Enterprises Performance

Based on the static spillover effect researches of foreign direct investment(FDI), some scholars have analyzed the periodic change of FDI spillover effects over time. Due to the limits of absorption capability and competitive capacity, the performance of domestic enterprises is influenced by FDI entry tenure. With different characteristics, foreign capital enterprise heterogeneity has different effects on domestic enterprise performance. Based on a comprehensive panel data on manufacturing firms in China in 1998-2007, this study is to analysis how performance of enterprises on both intra-manufacturing and inter-manufacturing industry are changing with FDI over time. We further explore the regulatory role of imitation barriers.The results show that :(1) entry tenure of foreign firms has a positive relationship with the productivity of domestic firms in the same and upstream industry while for the downstream industry the relationship is mild;(2) for inter-manufacturing industry, the positive relationship is weaker when the foreign firms have higher barriers of imitation(less rhythmic entry pattern, higher intangible asset intensity and higher export intensity) while for intra-manufacturing industry the positive relationship is weaker with lower intangible asset intensity and higher export intensity. We further analyze the relationship between entry tenure of foreign firms and inter-manufacturing industry spillovers(1) entry tenure of foreign firms has a positive effect on the productivity of domestic firms and the effect becomes weaker over time. And the foreign firms’ barriers of imitation(higher entry rate, higher intangible asset intensity) regulate the positive effect negatively;(2) from the angles of different resources of FDI, compare with Hong Kong, Macao and Taiwan capital, Western Capital initially negatively affects local competitors’ productivity, followed by a positive effect with the increase of entry tenure,(3)from the point of market-oriented, both export-oriented and host countries market-oriented foreign investment enterprises may make domestic enterprises to obtain positive spillover effect with the increase of entry tenure;(4) from the viewpoint of entry mode, the sole proprieties form capital has a positive effect on the domestic firms’ productivity whereas the joint venture capital has little effect.This study has extended the primary researches which required FDI to have immediate or permanent spillover effects. It has theoretically provided new directions for furthering the FDI policy: to emphasis the reasonable speed and regular pattern in the introduction of foreign capital; to encourage foreign enterprises to sell their products in the domestic market; to establish strategic alliances with domestic enterprises; to promote interaction between upstream and downstream enterprises with foreign enterprises; to pay attention to the heterogeneity of FDI; to encourage domestic enterprises to cultivate and improve their absorption ability.