Abstract
This paper investigates the proposition that foreign direct investment in a high-technology industry is motivated in part by the sourcing of country-specific technological advantages embedded in foreign firms. The empirical findings show that foreign equity investment is drawn to American biotechnology firms with high levels of patent activity. We suggest that, in the biotechnology industry, foreign direct investment in the form of equity participation can be an efficient vehicle for tapping into country-specific, firm-embodied technological advantages.
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*Weijian Shan is Managing Director of J.P. Morgan, an investment bank. He was Assistant Professor of Management at the Wharton School, University of Pennsylvania between 1987 and 1993. He received his Ph.D. from University of California-Berkeley in 1987.
**Jaeyong Song is Assistant Professor of Strategy and International Management at the Columbia Business School, Columbia University. His current research interests focus on the management of global production and R&D networks.
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Shan, W., Song, J. Foreign Direct Investment and the Sourcing of Technological Advantage: Evidence from the Biotechnology Industry. J Int Bus Stud 28, 267–284 (1997). https://doi.org/10.1057/palgrave.jibs.8490101
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DOI: https://doi.org/10.1057/palgrave.jibs.8490101