Does the Choice of IJV under Institutional Duality Promote the Innovation Performance of Chinese Manufacturing Firms? Evidence from Listed Chinese Manufacturing Companies

Chong Wu,Siyi Bo,Xing Wan,Shifan Zhang,Meihua Chen,Min Ji

doi:10.3390/su12176869

Abstract

The relationship between the strategic choice of internationalization under institutional duality and the performance of emerging market multinational enterprises (EM-MNEs) will become a focal point for scholars, practitioners and policy makers in the future. In order to better understand the determinants of the entry mode choice under institutional duality for EM-MNEs, based on the sample of Chinese manufacturing listed companies ‘going out’ from 2003 to 2015, we investigated the impact of organization institutional inertia and host-country institutional quality on the choice of the international joint venture (IJV) of Chinese manufacturing firms, as well as the effect and potential problems of the IJV choice on the firms’ innovation performance under institutional duality. The main results of our empirical analyses provide evidence that the response to institutional duality means that Chinese firms have the possibility to choose IJV in entry modes ahead of their capability support, and subject to insufficient professional field accumulation, cross-cultural management and joint governance capability, this premature choice of IJV actually hinders their innovation efficiency. Furthermore, the test on the influence of firm heterogeneity found that, when the firm is privately owned or has a lower internationalization breadth, the above negative moderating effect of IJV choice is more significant. Our findings enrich the literature on the relationship between the strategic choice of internationalization and innovation performance of EM-MNEs, and provide inspiring and straightforward empirical evidence.

Highlights

After 2000, the Chinese government found that traditional technology import or export trade could not effectively enhance the international competitiveness and independent innovation capability of Chinese firms
(2) The level of firm innovation indicators was uneven, and R&D input (RDIN) and international joint ventures (IJV) were positively and negatively correlated with Lnpat, respectively. This is consistent with the hypothesis in this paper that a premature IJV choice has a negative impact on the innovation of firms in the stage of international leapfrog development
Prior studies on the relationship between entry mode choice and performance are confined to the multinational enterprises (MNEs) of developed countries

Summary

Introduction

After 2000, the Chinese government found that traditional technology import or export trade could not effectively enhance the international competitiveness and independent innovation capability of Chinese firms. Since 2018, the amount of Chinese firms’ OFDI in the manufacturing sector has been the largest, accounting for 49.6% of the total, and it continues to be the most popular industry for China’s overseas investment. This shows that, in response to the government’s encouragement and the pressure of ‘anti-globalization’, many manufacturing firms have conducted a lot of OFDI without the gradual accumulation of internationalization, and China’s ‘going out’ manufacturing firms generally show a trend of leapfrog development of internationalization [4]

Methods

Results

Conclusion