The impact of FDI-related inventor mobility on the innovation performance of domestic firms: Evidence from the V4 countries

Abstract

Foreign direct investment (FDI) is often seen by policymakers as a major possibility for development, especially in the case of countries and regions that lag behind. In particular, the countries of the Visegrad Group (V4) have experienced intense FDI inflows. However, empirical estimates of the efficiency of FDI are ambiguous. This paper therefore estimates the impact of the FDI-induced knowledge spillovers in the form of inventor mobility on the innovation performance of domestic firms in the V4 countries. Here, not only the quantity dimension, but also the under-researched quality of introduced innovations is investigated. To measure innovation quality, the study follows the novel approach of calculating the technological similarity of patents introduced to both past and future inventions in the region. In addition, the distinction is made between start-ups and incumbent firms. The analysis results show that the presence of FDI-related inventor mobility positively affects both the quantity and quality of domestic firms' innovations. However, no difference in the innovation performance between start-ups and incumbents was found, suggesting that different firms have equal opportunities to use foreign knowledge.