Outward Foreign Direct Investment and Domestic Innovation Performance: Evidence from China

Li, J.; Strange, R.; Ning, L.; Sutherland, D.

Abstract

Recent years have witnessed substantial outward foreign direct investment (OFDI) from many emerging economies. Should the governments of these economies encourage OFDI in order to promote domestic innovation? Much OFDI by emerging economy multinational enterprises (EMNEs) has been undertaken to acquire strategic assets overseas, but do these acquisitions bring innovation benefits at home? The empirical analysis presented in this paper considers the effects of OFDI on regional innovation performance, using a panel of Chinese provinces, and finds that OFDI has a very significant impact on domestic innovation. Furthermore, we also identify three contingent factors – absorptive capacity, foreign presence, and the competition intensity of the local market – that moderate the impact of OFDI on innovation performance.

Citation

Li, J., Strange, R., Ning, L., & Sutherland, D. (2016). Outward Foreign Direct Investment and Domestic Innovation Performance: Evidence from China. International Business Review, 25(5), 1010-1019. https://doi.org/10.1016/j.ibusrev.2016.01.008

• Journal Article Type: Article
• Acceptance Date: Jan 16, 2016
• Online Publication Date: Feb 3, 2016
• Publication Date: Oct 1, 2016
• Deposit Date: Jan 25, 2016
• Publicly Available Date: Aug 3, 2017
• Journal: International Business Review
• Print ISSN: 0969-5931
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 25
• Issue: 5
• Pages: 1010-1019
• DOI: https://doi.org/10.1016/j.ibusrev.2016.01.008
• Public URL: https://durham-repository.worktribe.com/output/1391030