Impact of foreign ownership on innovation

IntroductionIn today's complex and rapidly changing business environment, converging technology and business strategy is crucial for sustainability of the companies, specifically in developing economies. One of the main drivers of facilitating explorative and revolutionary technology innovations is corporate governance mechanisms, including ownership structure of the companies.Innovation and technology are one of the main aspects in which foreign-owned and domestically owned firms differ in European and non-European countries [Dachs, Peters 2013]. Ebersberger and Loof [2005] analyzed the innovation behavior and performance of foreign owned firms in the Nordic region, and found that in Norway, foreign-owned firms have a larger propensity to patent than domestically owned firms. These results does not hold for other Nordic countries [Ebersberger, Loof 2005]. Consistently, Vishwasroa and Bosshardt [2001] argue that technological achievement is essential for the long-run economic growth and foreign-owned firms are more likely to adopt new technology in India. Diaz-Diaz et. al. [2008] reports that there is no significant difference between the innovation of foreign and domestic firms for Spanish sample. Since different results are found for different countries, evidence from more countries are necessary to contribute to the literature that analyzes the impact of foreign ownership on innovation. Considering relatively scarce resources (micro and macro) devoted to innovative technology in emerging markets, the necessity of technological investment and transfer by foreign partners is crucial. Thus, we mainly focus on foreign ownership and technology achievement relationship in emerging market context.Literature generally uses RD RD the dominance of foreign-owned firms in the largest firm size group is the main factor contributing to the gap in the percentage of innovators between foreign-owned firms and domestic firms. …