Abstract
This study investigates whether and to what extent EM MNEs employ OFDI for knowledge-seeking and knowledge-integration purposes to improve their innovation capability at home. Extending previous studies that have identified the knowledge-seeking motives and also provided some evidence for their validity, our study aims to examine how such OFDI can benefit the innovation performance of EM MNEs at home. Using survey data from a sample of manufacturing firms in China, we demonstrate that OFDI is positively related to innovation performance. We also find that the positive relationship between OFDI and innovation performance is stronger when foreign firms have acquired an ownership interest in an EM MNE and when they have higher R&D intensity. Finally, theoretical and managerial implications are discussed.
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