Out of passivity: potential role of OFDI in IFDI-based learning trajectory

Abstract

This study discusses how outward foreign direct investment (FDI) can complement the inward FDI-based technological capability-building process, through an analysis of the Shanghai Automotive Industry Corporation case. When a firm is upgrading its technological capability, outward FDI can allow learners to have access to human-embedded skills and knowledge and other intellectual assets that are hardly accessible through the inward globalization strategy. Access to a wide range of external resources is a critical ingredient for improving technological capability, and it can also promote self-learning capability by encouraging subsequent learning-by-doing practices. Accordingly, outward FDI can augment “active” nature in the “passive” learning mode created by the inward globalization strategy.