Outward FDI and Innovation Performance of Chinese Firms: Why Can Home-Grown Political Ties Be A Liability? |
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| Institution: | 1. Nottingham University Business School, University of Nottingham, Jubilee Campus, Nottingham, NG8 1BB, UK;2. Graduate School of Business and Law, RMIT University, 379-405 Russell Street, Melbourne, Vic 3000, Australia;3. Dongbei University of Finance & Economics, Dalian 116025, China;4. Lee Shau Kee School of Business and Administration, Hong Kong Metropolitan University, Homantin, Kowloon, Hong Kong;1. Assistant Professor, Jönköping International Business School, Jönköping University;2. Professor, Cairnes School of Business & Economics, National University of Ireland Galway;3. Professor, Stockholm University, Stockholm Business School, Stockholm, Sweden;1. School of Management, Zhejiang University of Technology, 288 Liuhe Road, Xihu District, Hangzhou, Zhejiang 310023, China;2. School of Management, University of San Francisco, 2130 Fulton Street, San Francisco, CA, USA 94117 |
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| 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. |
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