AIB 2012 Conference Proceedings - Academy of International ...

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expatriate staffing strategy of reverse-innovating MNEs. We tested our hypotheses against a sample of 514
subsidiaries established in 15 emerging markets during the period between 1996-2006. The results support our
development of an integrated TCE-RBV conceptualization of the impact of normative institutions on the
strategy, structure and performance of foreign-investing MNEs. Within this framework, our results suggest that
as governmental normative distance increases, reverse-innovating MNEs will prefer to employ more expatriates
and to enter emerging markets via a wholly-owned governance structure. Conversely, under conditions of
heightened technological normative distance, these same MNEs will choose to enter through joint venture
partnerships. To examine the efficacy of these risk-reduction strategies, we investigated the performance
implications associated with these strategic endeavors. Reverse-innovating MNEs' preference for full ownership
was found to predict enhanced financial performance. (For more information, please contact: Michael Sartor,
University of Western Ontario, Canada: msartor.phd@ivey.ca)
The Economic Impacts of Technological Capability, FDI and R&D in Emerging Economies
Hyun Shin, Long Island University
Steven Chang, Long Island University
In this paper, we investigate the dynamic, interdependent relations among technological capability (embodied
vs. disembodied technology position), FDI (inward vs. outward FDI), R&D, and a nation's economic progress
(GDP). We choose four emerging countries in two clusters: 1) Brazil and Mexico (Catching-up) and 2) Korea and
Taiwan (Pre-frontier). We use Vector Autoregressive (VAR) modeling to analyze quarterly time-series data
(1998:1Q-2007:4Q) between two important global economic events, i.e., the Asian Financial Crisis of 1997 and
the Subprime Mortgage Crisis of 2008. We find that 1) technological capability has a positive long-run impact on
GDP of Korea and Taiwan; and 2) enhanced embodied position helps Mexico and Brazil attract more inward FDI
while improved disembodied position facilitates Taiwan and Korea to increase outward FDI over time. In
addition, we observe that the relationship among technological capability, FDI, and R&D varies across countries.
These findings provide insightful policy implications for emerging economies at different development stages,
helping them compete successfully in a globalized economy. (For more information, please contact: Hyun Shin,
Long Island University, USA: hyun.shin@liu.edu)
Export Intensity, Domestic Market Competition, and Product Innovation in an Emerging Economy
Zhenzhen Xie, Hong Kong University of Science and Technology
Jiatao Li, Hong Kong University of Science and Technology
Recent empirical studies have consistently found a positive relationship between firm-level export and product
innovation, attributing this as "learning by exporting". We argue that in a large emerging economy such as
China, this relationship could be inverted-U shaped. Exporters in emerging economies are usually technology
leaders in their domestic market, but technology laggards in international markets. When the export intensity is
low, the exporters pay attention to the domestic market and tend to make product innovation by combining
their domestic market knowledge with superior technological capabilities gained from exporting. When export
intensity exceeds a threshold, the exporters may shift their focus to overseas markets, where their competitive
advantage might lie in efficient and quality manufacturing rather than in superior technological or market
knowledge. This may prevent highly intensive exporters from making product innovation. When domestic
competition is high, less intensive exporters are more likely to make full use of the knowledge they gain through
exporting and make product innovations to compete domestically. Meanwhile, intense domestic competition
might push exporters to focus more on efficient and quality production and abandon product innovation. An
analysis on 6,197 manufacturers in China's automobile industry during 2005-2007 supports the above
argument. (For more information, please contact: Zhenzhen Xie, Hong Kong University of Science and
Technology, Hong Kong, SAR-PRC: xiezz@ust.hk)
AIB 2012 Conference Proceedings
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