The Influence of Foreign Ownership on Firm’s Digital Orientation: Evidence from China

Shan Zhu () and Jiuyu Dong ()
Additional contact information
Shan Zhu: China University of Petroleum (East China)
Jiuyu Dong: Dalian University of Technology

Management International Review, 2025, vol. 65, issue 4, No 3, 673-698

Abstract: Abstract This study explores the impact of foreign ownership on a firm’s digital orientation. Combining the liability of foreignness (LOF) literature, which highlights foreign firms’ disadvantages in host markets, with signaling theory, we argue that digital orientation can mitigate LOF by serving as an effective signal to stakeholders. By developing a digital orientation, firms can signal both technological competence and alignment with host market priorities to overcome the LOF associated with foreign ownership. We then investigate how subnational factors influence such an impact. We argue that political turnover shifts signal reception, reducing firms’ likelihood to develop a digital orientation to address LOF from foreign ownership in their local context. Conversely, regional digitalization shapes signal transmission and firms with a higher proportion of foreign ownership are more likely to develop a digital orientation. Our analysis, based on data from Chinese manufacturing firms between 2012 and 2020, generally supports our hypotheses. This study contributes to international business and digital strategy research by identifying digital orientation as an effective signal to overcome LOF with emphasizing subnational level environmental influences.

Keywords: Foreign ownership; Digital orientation; Liability of foreignness; Signaling theory (search for similar items in EconPapers)
Date: 2025
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s11575-025-00586-4 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:manint:v:65:y:2025:i:4:d:10.1007_s11575-025-00586-4

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/11575

DOI: 10.1007/s11575-025-00586-4

Access Statistics for this article

Management International Review is currently edited by Michael-Jörg Oesterle and Joachim Wolf

More articles in Management International Review from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().