DescriptionThis dissertation disentangles the dynamic impact of inward foreign direct investment (FDI) on host country indigenous firms in two respects, namely, the competition effect and technological diffusion effect of FDI, and it addresses the role of heterogeneous technological accumulation among indigenous firms in creating variations in the form of foreign-indigenous interaction. From the perspective of competition and technology diffusion, the dissertation unpacks the varying dynamic nature of FDI in different segments of domestic industry. This dynamic approach provides an explanation for some previously controversial findings in the literature. In making a contribution to the evolutionary theory of the firm, the dissertation also enriches our understanding of continuous corporate technological accumulation in a transitional external environment. The different learning outcomes observed among indigenous firms may reflect their partially inherited dynamic capabilities in managing a transition to a new technological trajectory, and not merely their absorptive capacity as measured by the extent of their prior knowledge overlap with foreign firms. These arguments are tested in the context of technological capability formation of firms in the Chinese automobile industry - in particular, firms that assemble passenger cars or that produce components for them. Using firm-level longitudinal datasets gathered from various secondary sources that cover the Chinese automaker and major parts and component categories, the dissertation also contributes to the debate about the effect of joint venture policy on indigenous growth by exploring its indirect positive impact.