Outward FDI and Innovation Performance of Chinese Firms: Why Can Home-Grown Political Ties Be A Liability?

Wang, Chengqi; Piperopoulos, Panagiotis; Chen, Shihua; Ming, Alan Au Kai; Herbert, Kendall

Abstract

We explain how home-grown political ties of Chinese firms negatively influence the effect of outward foreign direct investment (OFDI) on the innovation performance of their parent firms. Our results show that these ties can turn into a liability in the host countries (particularly developed ones) due to their misfit with the local institutional environment, hampering the parent firms' innovation performance from OFDI. We also clarify how absorptive capacity of the parent firm mediates the relationship between OFDI and innovation performance. Our study furthers understanding of the link between internationalization and innovation performance and the 'dark side' of political ties.

Citation

Wang, C., Piperopoulos, P., Chen, S., Ming, A. A. K., & Herbert, K. (2022). Outward FDI and Innovation Performance of Chinese Firms: Why Can Home-Grown Political Ties Be A Liability?. Journal of World Business, 57(3), Article 101306. https://doi.org/10.1016/j.jwb.2021.101306

• Journal Article Type: Article
• Acceptance Date: Dec 19, 2021
• Online Publication Date: Dec 26, 2021
• Publication Date: 2022-04
• Deposit Date: Jan 5, 2022
• Publicly Available Date: Jun 27, 2023
• Journal: Journal of World Business
• Print ISSN: 1090-9516
• Peer Reviewed: Peer Reviewed
• Volume: 57
• Issue: 3
• Article Number: 101306
• DOI: https://doi.org/10.1016/j.jwb.2021.101306
• Keywords: internationalization; political ties; innovation; organizational learning; absorptive capacity; institutional fit
• Public URL: https://nottingham-repository.worktribe.com/output/7166142
• Publisher URL: https://www.sciencedirect.com/science/article/pii/S1090951621001176