Although several studies have shown that inward foreign direct investment (FDI) often leads to greater host country productivity, researchers have yet to determine the relative importance of direct technology transfer and competitive pressure. To assess the relative importance of the two...

Firms have different motives for investing abroad, most notably to exercise existing capabilities, but also to build new capabilities by accessing knowledge located abroad. Recognizing this heterogeneity helps determine whether foreign investments transfer technology to their host industries....