This study investigates two relevant dimensions of institutional distance -knowledge and economic distance -that influence the overseas research and development (R&D) intensity of emerging market multinational enterprises. We undertake a longitudinal analysis of 121 listed Chinese manufacturing multinational enterprises for the period 2011-2016. The results reveal that the enterprises' overseas R&D is more intense in host countries with greater knowledge and economic distance. Moreover, as the strength of intellectual property rights protection in host countries grows, the positive effects of knowledge and economic distance on the enterprises' overseas R&D intensity become weaker. We also find that political ties with home country governments strengthen the positive relationship between knowledge distance and the enterprises' overseas R&D intensity, while its moderating effect on the relationship between economic distance and overseas R&D intensity is insignificant.
In recent years, as globalized R&D activities have been launched on a large scale, more and more scholars have started to study overseas investment activities, but most of the research perspectives only focus on overseas investment entry methods, investment motives, and less on the study of reverse technology spillover of overseas R&D investment and the relationship with parent company innovation performance. Unlike overseas investment, overseas R&D investment is based on the knowledge base view, which considers knowledge as an important resource for enterprises, and tacit knowledge that is not easily understood and difficult to be expressed plays a key role in creating competitive advantage for enterprises. The dissemination of tacit knowledge is based on face-to-face interactions between individuals or organizations, and overseas R&D allows R&D activities to be geographically close to overseas markets and host country environments, thus enabling the transfer of home country knowledge and the acquisition of local knowledge. This study focuses on the motivation of overseas R&D investment, reverse technology spillover and relationship with parent company performance, and discusses future research directions.
Purpose
Based on an ensemble sample of multinational enterprises (MNEs), this study aims to explore the effect of the interactions between Chinese parent firms’ knowledge (including both technological and marketing knowledge), equity control and cultural distance on the business performance of their overseas branches under different subsidiary roles.
Design/methodology/approach
The study uses a data set compiled from 138 listed Chinese manufacturing enterprises and their 231 overseas subsidiaries to test the hypotheses regarding the interactive effects of transferred knowledge types and the subsidiary’s control mode.
Findings
The empirical results suggest that the moderating effects of equity control and cultural distance vary with the types of the parent firm’s knowledge and subsidiary roles. Specifically, equity control positively regulates the relationship between technological knowledge and subsidiary performance while negatively moderating the relationship between marketing knowledge and subsidiary performance. Cultural distance appears to negatively regulate the relationship between marketing knowledge and subsidiary performance. This binary relationship is shown to be more significant for the implementer subsidiaries.
Originality/value
Drawing on the literature on inter-firm governance and knowledge-induced innovation mechanisms, the authors develop a theoretical contingency framework to derive some managerial implications for inter-firm and infra-firm knowledge transfer in light of MNEs’ performance integrity.
From the theoretical perspective of UPPSALA model, this paper divides the internationalization of enterprises into three stages. By analyzing the internationalization process of Geely, Midea Group and Shuanghui, this paper explores the main obstacles and breakthrough paths faced by enterprises at different stages.
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