외국인직접투자가 제품시장 경쟁의 매개효과를 통하여 기업혁신에 미치는 영향

The Effects of Inward Foreign Direct Investments on Firm Innovation through a Mediation Effect of Product Market Competition

Purpose - For Korean listed firms, this study investigates the effects of inward foreign direct investment (FDI) on innovation through a mediation effect of product market competition. Design/methodology/approach - Using the sample constructed by 16,591 firm-year observations between 1999 and 2016, this study adopts the methodology presented by Baron and Kenny (1986) in order to confirm a mediation effect of product market competition. Findings - First, inward FDI increases the degree of product market competition. This result indicates that FDI poses a competitive threat to Korean listed firms. Furthermore, the mediation effect of product market competition is statistically significant, which can be seen as empirical evidence that a competitive effect exists in FDI for Korea. Second, the main results remains robust in estimating Poisson, negative binomial and Tobit models, in estimating the empirical model at industry-level and in using alternative variables for product market competition. Meanwhile, the competitive effect of FDI only occurs in greenfield FDI when classifying FDI into greenfield and cross-border M&A. Finally, the competitive effect of FDI does not exist for Chaebol firms. Research implications or Originality - This study differs from Korean literature by using the number of patent applications that gauges successful innovation as a proxy for firm innovation. In addition, this study first explores the effect of FDI, considering product market competition as a mediation variable. The findings in this study contribute to providing further evidence for the literature relating to FDI or firm innovation. Furthermore, at a time when the scale of FDI continues to decline sharply, empirical analysis for the effects of FDI provides policy makers with implications on absorbing FDI to Korea.