Knowledge spillover through foreign direct investment in textile industry

Abstract

The purpose of this study is to identify whether the foreign direct investment can prompt the occurrence of knowledge spillover on textile companies that was caused by demonstration effect, labour turnover, as well as vertical linkage. The research method used is a mixed method. The result of quantitative approach shows that foreign direct investment indeed prompts the occurrence of knowledge spillover in the textile industry, and the labour turnover causes this. On the other hand, the result of qualitative approach shows that innovation in the textile industry, for the most part, is caused by demonstration effect that was shown by the competitor.