Does Institutional Distance Affect Transnational Knowledge Spillovers Between Countries?

Subsidiary staffing strategy and innovation performance in Chinese multinational enterprises: the moderating effect of institutional distance

“…EMNEs usually do not compete directly in foreign markets, instead, they acquire intangible strategic assets (including knowledge, technology, brands, etc.) through overseas subsidiaries and utilize them in huge domestic markets, such as China (Ramamurti 2012;She et al 2021). Thus, when there is a large institutional distance between the home and host countries, EMNEs may use a lower proportion of PCNs in their subsidiaries because the greater participation of HCNs in overseas subsidiaries helps companies understand knowledge and organizational practices in the context of local conditions (Hyun, Oh and Paik 2015;Law et al 2009).…”

“…Because invention patent applications represent the development of the most advanced technology and have the highest innovation and economic value, they are often used as agents of innovation performance (Filippetti, Frenz and Ietto-Gillies 2017; Zhou, Hong and Wu 2019). Patent applications can truly reflect the innovation performance of an enterprise, and they reflect lagging innovation activities; thus, this article will lag the variables by one period (She et al 2021). Since IPA is measured by quantity, we have performed a logarithmic conversion of patent data.…”

“…HCNP is a proportion; thus, logarithmic conversion is not required. ID represents the institutional distance between the home and host countries, that is, the degree of institutional difference between the two countries (Kostova 1999;She et al 2021). The institutional data used in this article come from the Worldwide Governance Indicators, which are based on hundreds of variables from 37 independent data sources constructed by 31 organizations (Kaufmann, Kraay and Mastruzzi 2005).…”

“…In recent international business studies, scholars focusing on the knowledge transfer of multinational enterprises (MNEs) have gradually shifted their attention from parent companies to subsidiaries, and believe that the role of subsidiaries in knowledge transfer may be more important (Cheong et al 2019;Harzing, Pudelko and Reiche 2015;Michailova and Mustaffa 2012;Williams and Lee 2016), especially emerging market multinational enterprises (EMNEs) (Kozhakhmet and Nurgabdeshov 2022;Zhu et al 2018). In contrast, MNEs in emerging markets do not have the strong technological resources of developed countries, and they hope to overcome the limitations of domestic technological resources and utilize the abundant human capital and R&D resources abroad (Ramamurti 2012; She et al 2021), which is a typical overseas knowledge-seeking behavior. For example, Chinese MNEs tend to acquire intangible strategic assets (knowledge, technology, brands, etc.)…”

“…For example, Chinese MNEs tend to acquire intangible strategic assets (knowledge, technology, brands, etc.) through overseas subsidiaries networks and exploit them in the increasing Chinese market (Child and Rodrigues 2005;She et al 2021;Yakob, Nakamura and Ström 2018). Subsidiaries are not only knowledge recipients but also important sources of knowledge, and play an important role in the knowledge strategy of EMNEs (Cheong et al 2019;Gupta and Govindarajan 2000).…”