Abstract
We explain how home-grown political ties of Chinese firms negatively influence the effect of outward foreign direct investment (OFDI) on the innovation performance of their parent firms. Our results show that these ties can turn into a liability in the host countries (particularly developed ones) due to their misfit with the local institutional environment, hampering the parent firms’ innovation performance from OFDI. We also clarify how absorptive capacity of the parent firm mediates the relationship between OFDI and innovation performance. Our study furthers understanding of the link between internationalization and innovation performance and the ‘dark side’ of political ties.
| Original language | English |
|---|---|
| Article number | 101306 |
| Number of pages | 16 |
| Journal | Journal of World Business |
| Volume | 57 |
| Issue number | 3 |
| DOIs | |
| Publication status | Published - Apr 2022 |
UN SDGs
This output contributes to the following UN Sustainable Development Goals (SDGs)
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SDG 10 Reduced Inequalities
Keywords
- Absorptive capacity
- Innovation
- Institutional fit
- Internationalization
- Organizational learning
- Political ties
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