Do Chinese MNEs Always Improve Their Innovation Performance from Internationalization?

Abstract

We examine how the innovative performance of Chinese MNEs is affected by the way in which they configure their portfolio of subsidiaries. To this end, we acknowledge that innovation performance is not an one-dimensional construct, but can vary in terms of scale and quality. We rely on an empirical analysis based on 178Chinese MNEs operating in medium-high and high tech industries, tracking their subsidiaries portfolios and the relative foreign direct investments. . Our preliminary results show that the geographical breadth (i.e. the number of countries in which each MNE has at least one subsidiary) and the geographical depth (i.e. the average number of subsidiaries in each country) are negatively associated to firm’s innovation scale but positively associated to its innovation quality. Additionally, results show that the predominance of acquisitions as entry mode is positively associated to innovation quality. Finally, high average cultural distance is negatively associated to innovation quality; however, different effects arise when considering separately individual aspects of cultural distance (i.e. educational and religious distance).