Abstract: Abstract: The technology spillover effects of foreign-invested enterprises are investigated, and the relationships between such spillover effects and technology innovation of local enterprises are explored by concerning the effect of absorptive capability. A survey approach is and adopted an empirical analysis is conducted by drawing data from 177 local firms in nine industries located in Fujian and Guangdong Province. After using the SEM to test, the results show that: (1) local enterprises with abundant horizontal spillovers effect (demonstration,competition,labor mobility) will have higher absorptive capability and innovation performance than others that lack one; (2) even if horizontal spillovers effect (forward linkage, backward linkage) positively affects technology innovation, the influence appears to be weak; (3) considering the effect of absorptive capability, FDI technology spillovers play an important role on technology innovation performance of local enterprises.

Key words: horizontal spillovers effect, vertical spillovers effect, absorptive capability, technology innovation, local enterprise