Can foreign suppliers act as “innovation springboards” for firms? Evidence from China

Yi He, Shengdao Gan and Liang Xiao

Research in International Business and Finance, 2021, vol. 56, issue C

Abstract: This study provides a new approach for measuring supplier characteristics by distinguishing the countries where they are located. Using data of Chinese listed companies, we explore how firms' R&D investment and innovation efficiency (patents and citations) are affected by having foreign suppliers in their top five suppliers. Our findings suggest that foreign suppliers acting as transmitters of international technology increase firms' innovation efficiency based on organizational learning theory. Moreover, a series of uncertainties caused by foreign suppliers encourages firms to invest more in R&D based on strategic growth option theory. Mechanism tests show that foreign suppliers from countries with high innovation capacity and a similar Eastern culture have a greater impact on corporate innovation. Firms conduct more R&D activities to mitigate the uncertainties caused by foreign suppliers when they have insufficient overseas channels to acquire international knowledge and a high degree of dependence on foreign suppliers. These results are consistent with a series of robustness tests after accounting for endogeneity.

Keywords: Foreign suppliers; Corporate innovation; International knowledge transfer; Uncertain risk (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0275531920309612
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:56:y:2021:i:c:s0275531920309612

DOI: 10.1016/j.ribaf.2020.101353

Access Statistics for this article

Research in International Business and Finance is currently edited by T. Lagoarde Segot

More articles in Research in International Business and Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().