Abstract
With the development of economic globalization, FDI (Foreign Direct Investment) has been clustering in China. The study on how FDI's spillover improving innovation capability in local firms by network embeddedness has become a hot topic in the academic and business circles. Integrating network embeddedness, knowledge acquisition, absorptive capacity with innovation performance, this paper is to explain how network embeddedness affects innovation performance by knowledge acquisition for local firms. By building a conceptual model and empirical analysis, it shows that network embeddedness can improve innovation performance by knowledge spillover during FDI clustering, and absorptive capacity plays the intermediary role between them. Furthermore, it provides some theoretical guidelines and suggestions for local firms to improve their innovation capability.
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