Unpacking the Relationship between Outward Direct Investment and Innovation Performance:: Evidence from Chinese Firms

Xiaolan Fu; Jun Hou; Xiaohui Liu

doi:10.1016/j.worlddev.2017.09.021

Unpacking the Relationship between Outward Direct Investment and Innovation Performance: Evidence from Chinese Firms

Xiaolan Fu, Jun Hou, Xiaohui Liu

Birmingham Business School

Research output: Contribution to journal › Article › peer-review

21 Citations (Scopus)

Abstract

This study investigates the impact of outward direct investment (ODI) by Chinese MNEs on innovation performance and the conditions under which such an impact is moderated, based on a sample of Chinese firms. The empirical evidence suggests that undertaking ODI leads to an increase in the innovation performance of these Chinese firms. The impact of ODI on innovation is contingent on firm characteristics such as in-house R&D, strategic orientation, and international experiences as well as contextual factors associated with investment destinations and industry contexts. We also find that learning through ODI is a complex process. There is a substitution between ODI and in-house R&D in Chinese MNEs. Our findings suggest that conducting ODI in developed countries serves as an effective channel for latecomer firms to overcome internal resource constraints and leapfrog toward the technology frontier.

Original language	English
Pages (from-to)	111-123
Number of pages	13
Journal	World Development
Volume	102
Early online date	5 Nov 2017
DOIs	https://doi.org/10.1016/j.worlddev.2017.09.021
Publication status	Published - 1 Feb 2018

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title = "Unpacking the Relationship between Outward Direct Investment and Innovation Performance:: Evidence from Chinese Firms",

abstract = "This study investigates the impact of outward direct investment (ODI) by Chinese MNEs on innovation performance and the conditions under which such an impact is moderated, based on a sample of Chinese firms. The empirical evidence suggests that undertaking ODI leads to an increase in the innovation performance of these Chinese firms. The impact of ODI on innovation is contingent on firm characteristics such as in-house R&D, strategic orientation, and international experiences as well as contextual factors associated with investment destinations and industry contexts. We also find that learning through ODI is a complex process. There is a substitution between ODI and in-house R&D in Chinese MNEs. Our findings suggest that conducting ODI in developed countries serves as an effective channel for latecomer firms to overcome internal resource constraints and leapfrog toward the technology frontier.",

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N2 - This study investigates the impact of outward direct investment (ODI) by Chinese MNEs on innovation performance and the conditions under which such an impact is moderated, based on a sample of Chinese firms. The empirical evidence suggests that undertaking ODI leads to an increase in the innovation performance of these Chinese firms. The impact of ODI on innovation is contingent on firm characteristics such as in-house R&D, strategic orientation, and international experiences as well as contextual factors associated with investment destinations and industry contexts. We also find that learning through ODI is a complex process. There is a substitution between ODI and in-house R&D in Chinese MNEs. Our findings suggest that conducting ODI in developed countries serves as an effective channel for latecomer firms to overcome internal resource constraints and leapfrog toward the technology frontier.

AB - This study investigates the impact of outward direct investment (ODI) by Chinese MNEs on innovation performance and the conditions under which such an impact is moderated, based on a sample of Chinese firms. The empirical evidence suggests that undertaking ODI leads to an increase in the innovation performance of these Chinese firms. The impact of ODI on innovation is contingent on firm characteristics such as in-house R&D, strategic orientation, and international experiences as well as contextual factors associated with investment destinations and industry contexts. We also find that learning through ODI is a complex process. There is a substitution between ODI and in-house R&D in Chinese MNEs. Our findings suggest that conducting ODI in developed countries serves as an effective channel for latecomer firms to overcome internal resource constraints and leapfrog toward the technology frontier.

UR - https://dspace.lboro.ac.uk/dspace-jspui/handle/2134/27201

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JO - World Development

JF - World Development

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Unpacking the Relationship between Outward Direct Investment and Innovation Performance: Evidence from Chinese Firms

Abstract

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