Do green foreign direct investments increase the innovative capability of MNE subsidiaries?

Abstract

Technologies to mitigate climate change may diffuse from lead markets to the rest of the world through several mechanisms and make important contributions to the global green transformation. In this paper, we explore the role played by multinational enterprises (MNEs) in transferring knowledge and innovative capabilities in green technologies to their global subsidiaries. We posit that the degree of green knowledge transfer and innovative capability development in subsidiaries depend on: (i) the host country characteristics, (ii) the specific technology in question, and (iii) the mode of entry. The empirical analysis combines data on foreign direct investments with patent analysis. The results suggest that being a subsidiary of a green MNE has a positive impact on the number and quality of green patents produced locally. This green innovative advantage vis-à-vis domestic companies is larger in less developed countries and in those that are less reliant on oil rents, in particular if they already possess higher levels of relevant domestic innovative capacity. Furthermore, firm and sectoral characteristics also matter. The analysis suggests that green FDIs are more effective when technologies are characterized by low tradability and tacit knowledge. Finally, cross-border acquisitions are more efficient at strengthening green innovative capabilities than subsidiaries established with greenfield investments.

Publication DOI: https://doi.org/10.1016/j.worlddev.2023.106342
Divisions: College of Business and Social Sciences > Aston Business School > Economics, Finance & Entrepreneurship
College of Business and Social Sciences
Additional Information: Copyright © 2023. Published by Elsevier Ltd. This accepted manuscript version is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License [https://creativecommons.org/licenses/by-nc-nd/4.0/].
Uncontrolled Keywords: Foreign direct investments,Green innovation,Green transition,Multinational subsidiaries,Renewable energy,Geography, Planning and Development,Development,Economics and Econometrics,Sociology and Political Science
Publication ISSN: 1873-5991
Last Modified: 18 Apr 2024 07:26
Date Deposited: 03 Aug 2023 16:40
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Related URLs: https://www.sci ... 305750X23001602 (Publisher URL)
http://www.scop ... tnerID=8YFLogxK (Scopus URL)
PURE Output Type: Article
Published Date: 2023-10
Published Online Date: 2023-06-30
Accepted Date: 2023-06-20
Authors: Ribaudo, Dalila (ORCID Profile 0000-0003-4783-8970)
Rabellotti, Roberta
Amendolagine, Vito
Lema, Rasmus
Elmer Hansen, Ulrich

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