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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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    Cited by:

    1. 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.

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