In this study, we investigated the effects of foreign direct investment (FDI) spillovers on firm production and technical efficiency in Indonesia’s manufacturing sector from 2010 to 2015. We scrutinized three different channels of horizontal spillover, namely, demonstration, technology adoption, and competition channels. We also captured the heterogeneous effect of firms by categorizing them based on their technological intensity (low, medium, or high). Using time-varying stochastic production frontier analysis, we found that manufacturing firms in each technological group benefit from FDI, either from productivity improvement or technical efficiency improvement. High-technology firms mainly benefit from FDI due to their high technological absorption capability. Meanwhile, medium-high and medium-low tech firms increase productivity through the demonstration effect and the technology adoption channel, despite underperforming in technical efficiency. Finally, low-tech firms, which primarily employ unskilled workers, suffer from large inefficiency. We found that increased FDI, combined with improvements in technology absorption capacity, can help revitalize the productivity of low-tech firms. FDI, firm size, and access to foreign inputs all support production effects but have no direct positive impact on firms’ technical efficiency. The results of this study suggest that the government should ensure that domestic firms can absorb the technical capability of a foreign presence. Open innovation can help strengthen foreign–domestic linkages to contribute to growth through the transfer of knowledge, skills, and technologies.

https://www.mdpi.com/2199-8531/8/2/99/pdf?version=1654183343

The FDI Spillover Effect on the Efficiency and Productivity of Manufacturing Firms: Its Implication on Open Innovation

Abstract In this article, we estimate the role of Political Stability and Absence of Violence and Terrorism-PS in the context of Environmental, Social and Governance-ESG data at world level. We analyse data from 193 countries in the period 2011-2020. We apply Panel Data with Fixed Effects, Panel Data with Random Effects and Pooled Ordinary Least Square-OLS. We found that PS is positively associated, among others, to Population Density and Government Effectiveness, and negatively associated, among others, to Research and Development Expenditure and Maximum 5-day Rainfall. Furthermore, we apply the k-Means algorithm optimized with the application of the Elbow Method and we find the presence of four clusters. Finally, we propose a confrontation among eight different machine-learning algorithms for the prediction of PS and we find that the Polynomial Regression shows the higher performance. The Polynomial Regression predicts an increase in the level of PS of 0.25% on average for the analysed countries. JEL Codes: D7, D70, D72, D73, D78. 

The Role of Political Stability in the Context of ESG Models at World Level

Clustering and firm productivity spillovers in Indonesian manufacturing.

Loyal customers are committed to repeat patronage, making business referrals, and providing publicity for the business. However, rising customer expectations and price consciousness, advancement of technology, lack of product differentiation, and consumer choices have posted more challenges for customer retention. This paper examines the determinants of customer satisfaction in a business-to-business (B2B) packaged food retail setting, with a particular focus on the moderating role of switching cost towards customer loyalty. Using a survey-based approach, data was collected from 382 respondents who were customers of B2B packaged food retailers in Pakistan. The results of the study indicate that product quality, service quality, and price are significant determinants of customer satisfaction. Furthermore, the study finds that switching cost moderates the relationship between customer satisfaction and customer loyalty. In addition, the results show that switching cost has a significant positive effect on customer loyalty, indicating that customers are more likely to remain loyal to a retailer if the switching cost is higher. The study implies that retailers should focus on providing high-quality products and services at fair prices to enhance customer satisfaction and which leads to customer loyalty. Moreover, retailers should consider implementing switching costs strategies to enhance customer loyalty in the B2B packaged food retail setting. The findings of this study have important implications for the development of effective customer satisfaction and loyalty strategies in the B2B packaged food retail industry.

Determinants of Customer Satisfaction: The Moderating Role of Switching Cost towards Customer Loyalty in B2B Packaged Food Retail Setting

Foreign direct investment (FDI) has originally been regarded as the navigating force of economic activities and economic growth (EG) worldwide, especially in developing countries. The influence of FDI growth on EG involves the absorptive capacities of developing nations. The benefits of FDI can be maximized by enhanced technology transfers and productivity spillover. In this context, the motivation to conduct the current study was to investigate the impact of FDI on the TFP of developing countries, along with the control variables of human capital (HC) and the political institutional (PI) index. As the current study has been conducted in the context of developing countries, the researcher has collected data from world developing indicator (WDI) including Cambodia, Lebanon, Morocco, Malaysia, Thailand, Bahrain, and Cameroon. The panel data was collected from the aforementioned countries over a time period of 30 years. In order to obtain the results, the data were analyzed using the SYS-GMM estimation technique. The findings of the paper indicate that the lagged FDI has a significant impact on TFP, whereas the lagged FDI has an insignificant impact on TFP. The outcome obtained by the application of the interplay term FDI*HC indicated that FDI alone has no direct impact on TFP; however, the impact of the interaction term FDI*HC is positive on TFP. The result obtained by estimating the two interaction terms FDI*HC and FDI*INT collectively suggested that FDI alone has an insignificant influence on TFP; however, the impact of the interaction term FDI*INT on TFP is positive.

https://archive.aessweb.com/index.php/5008/article/download/219/414

Foreign Capital and Domestic Productivity in Developing Countries: An Empirical Analysis

The increasing dependence of South Asian countries on international remittances (IRM) and international tourism development (ITR) in the presence of political uncertainties has attracted scholars' attention. Although the largest receiver of IRM, South Asia fails to channel these funds to the tourism industry, which continues to operate below its potential. This study estimates the impact of IRM, political stability (PS), and their interaction with foreign direct investment (FDI) and relative price (RP) on ITR in South Asia. We used a balanced panel dataset of six South Asian countries from 1996 to 2020. We applied the pooled ordinary least squares (POLS), fixed effects (FE), feasible generalized least squares (FGLS), and Prais-Winsten regression with panel-corrected standard errors (PCSE), to estimate the results. The study discovered quite interesting and surprising results between IRM and ITR. The results suggest a statistically significant negative impact of IRM on ITR in South Asia, implying that the recipients of IRM tend to spend most of it on their basic level consumption needs and do not have incentives to save and invest. Further, the results suggest that PS positively moderates the relationship between IRM and ITR, suggesting that IRM will be channelized to the tourism sector if domestic investors expect low political risks in the region. In addition, the results indicate that PS and FDI have a statistically significant positive effect on ITR in South Asia. Moreover, RP has a negative and significant impact on ITR, implying that international tourists prefer cheaper destinations. This study provides crucial implications for South Asian economies. First, effective public policies are specifically designed for channelling IRM and FDI, focusing on enhancing the tourism industry's infrastructure. Second, PS is necessary for ITR and domestic investors to invest IRM in the tourism sector. Thus, policymakers must consider political factors while designing tourism policies and strategies. Third, the findings highlight the significance of price competitiveness for developing the tourism industry. Hence, we argue that policymakers should implement effective economic policies to stabilize regional prices to attract international tourists.

International Remittances and International Tourism Development in South Asia: The Moderating Role of Political Stability

Behavioral finance assumes that investors are irrational and several psychological factors, behavioral biases, and personality traits influence their investment decisions. Therefore, this study intends to examine how behavioral factors, such as personality traits and cultural norms, affect Pakistani investors’ decisions while considering the moderating effect of financial literacy and the mediating role of investor overconfidence. The study used PLS-SEM for statistical analysis on a final useable sample of 396 observations obtained from surveying investors based in Karachi, Lahore, and Islamabad. Our results indicate that overconfidence, extroversion, introversion, individualism and collectivism positively affect investment decisions. Further, we found that overconfidence reduces herding bias while financial literacy moderates the relationship. The empirical results also show that overconfidence mediates the association between (i) financial literacy and herding bias and (ii) financial literacy and investment decisions. Hence, we argue that investors should enhance their financial literacy to improve their investment capabilities and skills that are imperative for unique and independent investment decisions. Investors should also become financially literate for outperforming the market and not imitate other investors. Similarly, we urge policymakers to regulate and protect investors' interests by encouraging them to enhance their financial literacy. 

Do Personality Traits and Cultural Norms Influence Investment Decisions? The Role of Financial Literacy and Investor Overconfidence

This study examines the impact of foreign direct investment (FDI) on the total factor productivity (TFP) of host countries. Extensions of the new growth theory provide a framework in which FDI incr...

Foreign Direct Investment and Total Factor Productivity: Any Nexus?:

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International Remittances and International Tourism Development in South Asia: The Moderating Role of Political Stability

Do Personality Traits and Cultural Norms Influence Investment Decisions? The Role of Financial Literacy and Investor Overconfidence

Foreign Direct Investment and Total Factor Productivity: Any Nexus?: