Outward foreign direct investment and domestic innovation performance: Evidence from China

Jian Li, Roger Strange, Lutao Ning and Dylan Sutherland

International Business Review, 2016, vol. 25, issue 5, 1010-1019

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.

Keywords: Outward FDI; Regional innovation; Absorptive capacity; Foreign presence; Competition intensity (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (70)

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DOI: 10.1016/j.ibusrev.2016.01.008

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