Productivity Improvement Effect on an OFDI's Parent Company: Exploratory Study in Light of Ownership Heterogeneity

Abstract

The reverse technology spillover effect of Outward Foreign Direct Investment (OFDI) is an important way to increase the productivity of a parent company. In such spillover effects, ownership heterogeneity plays an important role. By matching data from the "Industrial Enterprise Database" and the "Directory of Foreign Direct Investment Enterprises (Institutions)", the present paper examines OFDI effects on the parent company's productivity improvement and the degree of this effect caused by ownership heterogeneity. After subdividing sample enterprises into five types according to their different ownership types, the moderating effect mode was applied to study the adjustment mechanism of the productivity effect brought about by OFDI together with external financing and personnel attraction. The results of the study show that corporations’ OFDI has a significant role in promoting the parent company’s productivity, and the productivity improvement effect of state-owned parent companies is higher than that of non-state-owned enterprises. The productivity effect of OFDI for parent state-owned enterprises and large private holding companies is higher than that of other enterprises, and their external financing and personnel attraction have a stronger promoting effect.