Title: Inward FDI and ICT: are they a joint technological driver of entrepreneurship?

Authors: Joao Leitao, Rui Baptista

Addresses: Department of Engineering and Management and Centre for Innovation, Technology and Policy Research (IN+), Instituto Superior Tecnico, Av. Rovisco Pais, 1049-001 Lisbon, Portugal. ' Department of Engineering and Management and Centre for Innovation, Technology and Policy Research (IN+), Instituto Superior Tecnico, Av. Rovisco Pais, 1049-001 Lisbon, Portugal; Max Planck Institute of Economics, Kahlaische Strasse, 10 07745 Jena, Germany

Abstract: This paper investigates whether inward foreign direct investment (FDI) and investment in information and communication technologies (ICTs) advance the development of entrepreneurial activity in the host economy. We propose that the combination of inward FDI with investment in ICT is a joint technological driver of entrepreneurship. Under a feedback causality context, a co-integrated vector autoregressive approach is used to examine the |pull| effect of ICT and the |push| effect of FDI. On the one hand, ICT |pulls| FDI; on the other hand, FDI |pushes| investment in ICT. Under a neo-Schumpeterian approach, the long term economic relationship among entrepreneurial activity, FDI and ICT drives creative destruction through the creation of further SMEs, thus revitalising the entrepreneurial innovative capacity of the host economies.

Keywords: entrepreneurship; foreign direct investment; FDI; information technology; communications technology; ICT; technological change; entrepreneurial activity; innovative capacity; innovation.

DOI: 10.1504/IJTTC.2011.040891

International Journal of Technology Transfer and Commercialisation, 2011 Vol.10 No.3/4, pp.268 - 288

Available online: 26 Jun 2011 *

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