WHAT DO WE KNOW? FDI INFLOWS, MANAGERIAL SPILLOVERS AND INNOVATION OUTCOMES OF LOCAL FIRMS DURING GLOBAL CRISES

Abstract

Global crises have become our business reality. How can local firms continue to sustain their competitiveness during these crises through innovation? Previous literature emphasized the role of foreign direct investment (FDI) inflows, but was generally inconclusive. This study examines FDI and managerial spillovers as antecedents of innovation outcomes in 369 local firms in 12 Eurasian countries during the 2008–2009 global financial crisis. The study finds that new product and service introductions by incumbent firms are driven by the local presence of the multinational enterprises (MNEs). Moreover, firms with more non-native managers and CEOs with substantial industry experience have a higher propensity to introduce new products and services. The study contributes to the theory of FDI spillovers and the literature on antecedents of innovation outcomes by showing that non-native managers can serve as channels of managerial spillovers. Furthermore, we conceptually distinguish between managerial spillovers from MNEs and managerial spillovers from abroad (e.g., via hiring managers born or educated abroad).