Towards Strengthening The Local Firms’ Absorptive Capacities: Conceptual Framework

Abstract

In developing countries the foreign direct investments (FDIs) and, especially, in sort of multinational Companies (MNCs) are identified as the major source of industrial upgrading in the host countries. The present paper stresses to explore ways to improve the local firms’ benefits of knowledge spillovers from the inwards FDIs, through the improvement of domestic firms’ absorptive capacities. The current study based on exploring literatures; to propose a conceptual framework showing the major organizational elements to improve local firm’s absorptive capacity in order to enhance the benefits of domestic firms from foreign direct investments’ knowledge spillovers. The present paper determines five critical elements ought to be embedded in the local firms in developing countries in order to upgrade their absorptive capacities