Year: 2004
Type: report
Abstract: Multinationals ’ mode of foreign expansion may depend on whether or not they expect technological externalities or spillovers to generate new competition. Existing models where ex-post spillovers affect the ex-ante entry choice usually study the choice between exporting and FDI with horizontal spillovers. I consider a monopoly firm with a vertical production structure that has four possible modes of entry, one of which includes out-sourcing of intermediate input production to a host county firm. Technological spillovers in this model are vertical, generating threat of entry of a new intermediate input pro-ducer. When outsourcing contracts are incomplete, vertical spillovers that generate threat of entry upstream do not necessarily benefit the multinational in the downstream market.
Author: Ragnhild Balsvik
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2500710930