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Institutional arbitrage across borders and EMNE innovation performance

Author

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  • Wu, Jie
  • Sawant, Rajeev
  • Zhou, Tingting
  • Wu, Aiqi
  • Bai, Wensong

Abstract

This study examines how institutional diversity of emerging multinational enterprises' (EMNE) country portfolios, specifically portfolios featuring more developed institutions, enhances EMNE innovation through institutional arbitrage strategies. Drawing on comparative institutional analysis of Chinese MNEs operating across 93 countries representing distinct institutional environments within EMNE country portfolio, we theorize and test how CEOs' political connections enable firms to leverage cross-national institutional diversity for innovation advantages. The results support our hypotheses that EMNEs with country portfolios characterized by more developed legal and financial institutions enhance EMNE innovation, and that these effects are amplified by CEOs' political connections. Our findings demonstrate how cross-national institutional diversity, rather than institutional distance or escapism, drives innovation outcomes for EMNEs.

Suggested Citation

  • Wu, Jie & Sawant, Rajeev & Zhou, Tingting & Wu, Aiqi & Bai, Wensong, 2026. "Institutional arbitrage across borders and EMNE innovation performance," Journal of International Management, Elsevier, vol. 32(4).
    • Handle: RePEc:eee:intman:v:32:y:2026:i:4:s1075425326000554
    DOI: 10.1016/j.intman.2026.101381
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