Technology Sourcing and Reverse Productivity Spillovers in the Multinational Enterprise: Global or Regional Phenomenon?

Abstract

The focus of this paper is the importance of regions in technology transfer by the multinational firm. Specifically, we focus on an issue that has become known as knowledge or technology sourcing via ‘reverse spillovers’, i.e. productivity effects running from domestic firms to foreign establishments. Traditionally this issue has presented a challenge for international business scholars, both in terms of identifying the phenomenon and in terms of determining the success of the strategy. In this paper we examine these questions within the context of the debate on globalization/regionalization. For a set of some 4500 subsidiaries of multinationals across a wide range of countries we show that reverse productivity spillovers via technology sourcing are significant but that they tend to be concentrated within ‘triad regions’ rather than across them. We also find that reverse spillovers from host country multinational enterprises are greater than those from other host country firms or from other foreign affiliates.