Asian Foreign Investment in the United States: A Firm-Level Study of Technology Acquisition and Transfer

Suny At Buffalo, Amherst NY

Investigators

Abstract

Existing theories of international technology transfer suggest that industrializing nations usually acquire new technology through inward investment, and from parent firms to subsidiaries. In contrast, this research is concerned with a new model of technology transfer in which firms from industrializing nations move to the technology source. By establishing subsidiaries inside the U.S., Asian companies are hypothesized to reverse the process of technology transfer through direct absorption of knowledge spillovers from U.S. firms and institutions. Innovations that arise from these spillovers can then be transmitted back to parent companies in Asia. This speeds up the process of technology transfer. This research project will assess the extent to which Asian companies obtain new technology via this model of outward foreign direct investment to the United States. Two approaches will be used. First, a large-scale postal survey of Asian branch facilities in the U.S. will be conducted . Approximately 600 establishments will be contacted. The survey will be restricted to subsidiaries from South Korea, Taiwan, Singapore, and Hong Kong, which are four of the five largest sources of Asian investment in the U.S.. The survey will focus upon the types of spillovers that are absorbed as well as the transmission mechanisms that support technology transfer. Second, personal interviews will be conducted with senior managers of the parent companies in Asia. These interviews will supply qualitative insights regarding the types of benefits that are obtained from direct investment in the U.S. Data from the postal survey will be analyzed using cross-tabulation, correlation, and conditional logit techniques. Data from the interviews will be explored via content analysis. This project will shed light on an emerging model of international technology transfer in the global economy. This model delivers technological benefits to Asian subsidiaries and their parent companies as well as employment and production benefits to U.S. host regions. The role of local business conditions in attracting particular types of inward investment will be explored via statistical analysis. In addition, the transmission mechanisms that support technology transfer will be assessed from both a local and international standpoint. Overall, the project will contribute to social and regional science by identifying the main factors that have led to the emergence of this new model of local and international technology transfer.