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Transnational Corporations - Volume 24, Issue 1, 2017
Volume 24, Issue 1, 2017
Transnational Corporations is a policy-oriented journal that serves as a specialized forum for the publication of research on the activities of transactional corporations and their implication for economic development. Volume 24 Number 1 is a special issue on the theme of India’s multinational enterprises and outward foreign direct investment.
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Guest editor’s introduction to the special issue: Indian outward FDI and MNEs.
Author: Jaya Prakash PradhanFollowing the ongoing liberalization and openness measures begun in the 1990s, an increasing number of Indian firms have progressively taken to outward FDI (OFDI), in line with their efforts to diversify away from domestic markets. This expansion has been heightened by market competition on firms’ home turf, the continued high growth of the home economy (leading to investible resources) and considerably expanding business prospects worldwide. Internationalization has gained strategic importance in the survival and growth of capable Indian firms in recent periods.
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Determinants of outward foreign direct investment: a study of Indian manufacturing firms.
Authors: Ronny Thomas and K. NarayananIn this paper we analyze the determinants of outward FDI (OFDI) with reference to Indian manufacturing firms. Mainly we examine the impact of firm-specific characteristics such as productivity, exports, imports of technology, and research and development (R&D) intensity on the OFDI of firms for the period from 1998 to 2009. We use dynamic random-effects Probit and Tobit models to examine the determinants of OFDI. The results support the theoretical argument that more highly productive firms undertake OFDI as a mode of internationalization. The study reveals a complementary relationship between OFDI and exports by Indian firms. R&D investment and imports of technology in the form of capital goods play important roles in both the probability of undertaking OFDI and the share of OFDI.
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The impact of international R&D on home-country R&D for Indian multinationals.
Authors: Filip De Beule and Dieter SomersExtant research on internationalization of research and development (R&D) has not examined what the impact of foreign R&D investments is for the investing corporate parent firms, in particular on domestic R&D investments. The aim of this paper is to examine the effectiveness of international knowledge sourcing through foreign R&D in an empirical analysis of the effects of foreign R&D investments on domestic R&D intensity for a panel of Indian firms. The paper specifically investigates the importance and impact of the role and the location of foreign R&D centres on parent-company R&D by analysing differences between foreign-technology-seeking and foreign-technology-exploiting R&D, and between centres in advanced countries and in developing countries. The analysis finds contrasting results between advanced and developing countries and between technology-exploring and technology-exploiting investments.
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Uncovering the institutional foundations of specialization patterns in the Indian pharmaceutical industry
Author: Heather TaylorThis article identifies the institutional foundations of the comparative advantages of the Indian pharmaceutical industry in generic bulk drugs, active pharmaceutical ingredients (APIs) and final dosages, and formulations manufacturing. Through studying six institutional areas in connection with the internationalization strategies of nine Indian pharmaceutical firms, this study illustrates how these comparative advantages have been evolving since liberalization of the Indian economy. It demonstrates how, in the post-liberalization era, both up-market outward foreign direct investment (OFDI) and the rise of contract-based partnerships are altering the way in which Indian pharmaceutical firms coordinate their action in the local sector. The shift towards more contact-based forms of coordination could support an industry-wide transition towards specialization in novel drug discovery and development. Although firms, especially larger ones, have been the main orchestrators of this shift, this study concludes that mainstreaming the necessary institutional mechanisms across the industry and employing the appropriate policy tools will be critical to supporting this transition.
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