DIY: How internationalization shifts the locus of indigenous innovation for Chinese firms |
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| Affiliation: | 1. Goodman School of Business, Brock University, 500 Glenridge Avenue, St. Catharines, ON L2S 3A1, Canada;2. Ivey Business School, Western University, 1151 Richmond Street North, London, Ontario N6A 3K7, Canada;3. Associate Professor of Strategy, Naveen Jindal School of Management, The University of Texas at Dallas, 800 West Campbell Rd, Richardson, TX 75080, United States;1. Université de Lorraine and Ecricome Universa, Nancy, France;2. Research Department, Central Bank of Albania, Sheshi “Skënderbej”, nr. 1, Tiranë, Albania;3. ICN Business School, 13 Rue Michel Ney, 54000 Nancy, France;1. Assistant Professor, Poznań University of Economics and Business, al. Niepodległości 10, 61-875 Poznań, Poland;2. Associate Professor, International Business & Strategy Group, D’Amore-McKim School of Business, Northeastern University, 360 Huntington Avenue, 315C Hayden Hall, Boston, MA 02115, United States;1. Department of Management, Bologna, Italy;2. Department of Industrial and Information Engineering & Economics, University of L’Aquila, Italy;1. Dipartimento di Scienze dell’Economia e della Gestione Aziendale, Catholic University of the Sacred Heart, 20123 Milan, Italy;2. Dipartimento di Scienze Economiche e Aziendali, University of Pavia, 27100 Pavia, Italy;3. Adam Smith Business School, Glasgow University, Glasgow G12 8QQ, Scotland, United Kingdom;1. Sun Yat-Sen Business School, Sun Yat-Sen University, Guangzhou, Guangdong Province, China;2. Texas Christian University, Fort Worth, TX 76129, USA;3. City University London, London, UK;4. Vienna University of Economics and Business, Vienna, Austria |
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| Abstract: | We elaborate theories of indigenous innovation by explaining how internationalization choices help emerging market firms transition from dependence on external knowledge to self-reliance on internal knowledge. Using a 1998–2007 census dataset of Chinese manufacturing firms, we theorize and test the moderation effect of foreign equity and export orientation on the relationship between knowledge and indigenous innovation. We show that foreign equity dis-incentivizes, while export orientation incentivizes, investments in internal knowledge. We contribute by showing that internationalization choices may radically change indigenous innovation outcomes by shifting the locus of problem solving outside or inside the firm. Our study corroborates the negative direct and indirect effects of external knowledge on indigenous innovation at the firm level previously suggested by China-centric scholars but also shows how two types of internationalization choices may gradually relieve firm-level dependence on imported technology. We bridge the gap between Western research and Chinese thought and practice by introducing a do-it-yourself (DIY) explanation of how firms may implement China’s indigenous innovation (zizhu chuangxin) policy. |
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| Keywords: | Knowledge Emerging market firms Internationalization Indigenous innovation |
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