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The effects of institutional quality and diversity of foreign markets on exporting firms’ innovation

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  • Wu, Jie
  • Wu, Zefu
  • Zhuo, Shuaihe

Abstract

This study examines the role of the institutional quality and diversity of foreign markets on exporting firms’ innovation performance. Building on the institutional economics theory, the institution-based view of international expansion, and the literature on international diversification, this study proposes that expanding into a foreign market with well-developed institutions helps exporting firms improve innovation performance and that a high degree of institutional diversity of multiple foreign markets positively influences firm innovation. The study also suggests that institutional diversity weakens the positive relationship between institutions and firm innovation. The findings provide support for the proposed hypotheses. Implications for both theory and practice are discussed.

Suggested Citation

  • Wu, Jie & Wu, Zefu & Zhuo, Shuaihe, 2015. "The effects of institutional quality and diversity of foreign markets on exporting firms’ innovation," International Business Review, Elsevier, vol. 24(6), pages 1095-1106.
    • Handle: RePEc:eee:iburev:v:24:y:2015:i:6:p:1095-1106
    DOI: 10.1016/j.ibusrev.2015.05.001
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    4. Lartey, Theophilus & Danso, Albert & Owusu-Agyei, Samuel, 2020. "CEOs' market sentiment and corporate innovation: The role of financial uncertainty, competition and capital intensity," International Review of Financial Analysis, Elsevier, vol. 72(C).
    5. Wu, Jie & Ma, Zhenzhong & Zhuo, Shuaihe, 2017. "Enhancing national innovative capacity: The impact of high-tech international trade and inward foreign direct investment," International Business Review, Elsevier, vol. 26(3), pages 502-514.
    6. Hameeda A. AlMalki & Christopher M. Durugbo, 2023. "Systematic review of institutional innovation literature: towards a multi-level management model," Management Review Quarterly, Springer, vol. 73(2), pages 731-785, June.
    7. Jian Du & Shan Zhu & Wen Helena Li, 2023. "Innovation through internationalization: A systematic review and research agenda," Asia Pacific Journal of Management, Springer, vol. 40(3), pages 1217-1251, September.
    8. Wu, Jie & Pangarkar, Nitin & Wu, Zefu, 2016. "The moderating effect of technology and marketing know-how in the regional-global diversification link: Evidence from emerging market multinationals," International Business Review, Elsevier, vol. 25(6), pages 1273-1284.
    9. Muhammad Usman & Rizwan Shabbir & Ilyas Ahmad & Ahsan Zubair, 2022. "Host Countries’ Institutional Environment and Multinational Enterprises: Does Home-Host Developmental Status Matter?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(4), pages 2640-2664, December.
    10. Buitrago R., Ricardo E. & Barbosa Camargo, María Inés, 2021. "Institutions, institutional quality, and international competitiveness: Review and examination of future research directions," Journal of Business Research, Elsevier, vol. 128(C), pages 423-435.
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