Strategic Asset Seeking and Innovation Performance: The Role of Innovation Capabilities and Host Country Institutions

Lili Mi,Xue-Feng Shao,Xiao-Guang Yue,Yuanfei Kang,Yulong Liu

doi:10.3390/jrfm13030042

Abstract

Peering through the lenses of the strategic intent perspective and strategic fit paradigm, in this study, we seek to examine the contingent conditions under which emerging market multinational enterprises (EMNEs) with strategic asset seeking (SAS) intent can achieve improved innovation performance. We developed a contingency model of how the relationship between SAS intent and innovation performance is contingent on the moderating effects of firms’ innovation capability and institutional quality in the host country, as well as on the synergistic interaction of independent moderating effects from these two factors. We combined survey data from 320 Chinese MNEs with archival data to test our hypotheses. Our results show that SAS intent can lead to positive innovation performance when (a) the investing firm has developed high levels of innovation capability, and (b) synergistic interactions exist between institutional quality and firms’ innovation capability regarding their moderating effect on the SAS intent-innovation performance link.

Highlights

Emerging market multinational enterprises (EMNEs) have been actively engaged in outward foreign direct investment (FDI), especially since the beginning of this century (UNCTAD 2017)
Drawing on the strategic fit perspective, we suggest that the direct link between strategic asset seeking (SAS) intent and innovation performance is dependent on the contingent conditions in terms of the alignment of the SAS intent with firms’ innovation capability and institutional quality in a host country
Through exploring the synergistic moderating effects of institutional quality and innovation capability, we explicitly address the arguments that only emerging market multinational enterprises (EMNEs) that have a high level of innovation capability can gain such institutional benefits because EMNEs differ in their innovation capability to internalize the external institutional advantage

Summary

Introduction

Emerging market multinational enterprises (EMNEs) have been actively engaged in outward foreign direct investment (FDI), especially since the beginning of this century (UNCTAD 2017). Extant research has suggested that EMNE FDI is strongly motivated by strategic intent to achieve specific goals, such as acquiring strategic assets, securing supplies of natural resources, and achieving a superior market position (Cui and Jiang 2009; Deng 2009; Kang and Liu 2016; Kolstad and Wiig 2012). This research gap is significant because we know little about the relationship between firms’ capabilities and the performance implications of SAS intent; even less is known about whether and how institutional quality in the host country affects EMNEs’ innovation performance in the home country when they are motivated by SAS intent for their FDI activities. The sophisticated markets for intangible assets such as technology and management know-how are mainly located in developed countries—where EMNEs face daunting challenges to operate given their embeddedness inherited from their home operations (Buckley et al 2016; Cuervo-Cazurra and Genc 2008). How the SAS intent of EMNEs can improve their innovation remains a challenging question for both management practice and academic research (Meyer 2015)

Results

Discussion

Conclusion