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Institutional Distance, Organizational Learning, and Innovation Performance: Outward Foreign Direct Investment by Chinese Multinational Enterprises

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  • Changjun Yi
  • Xueyu Xu
  • Chusheng Chen
  • Yenchun Jim Wu

Abstract

Institutional distance is the difference in institutional environments between a multinational company’s host country and its home country. This article explores the effects of formal and informal institutional distance (IID) on the innovation performance of Chinese multinationals with outward foreign direct investment (OFDI), as well as the moderating role of organizational learning in the relationship. The results suggested that a formal institutional distance (FID) paradox existed between the FID and OFDI firms’ innovation performance; the informal institutional distance inhibited the technology transfer from foreign subsidiaries to their parent companies and the growth of the parent companies’ innovation performance; exploratory learning can effectively attenuate the negative influence of IID on OFDI firms’ innovation performance.

Suggested Citation

  • Changjun Yi & Xueyu Xu & Chusheng Chen & Yenchun Jim Wu, 2020. "Institutional Distance, Organizational Learning, and Innovation Performance: Outward Foreign Direct Investment by Chinese Multinational Enterprises," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(2), pages 370-391, January.
    • Handle: RePEc:mes:emfitr:v:56:y:2020:i:2:p:370-391
    DOI: 10.1080/1540496X.2018.1545118
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    Cited by:

    1. Wei Zhang & Xiuli Zhong & Xue Li, 2024. "The impact of degree of internationalization of MNEs on green innovation performance: The moderating role of absorptive capacity and global dynamic management capability," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(1), pages 659-675, January.
    2. Junshuai Cheng & Qaisar Iqbal & Guangmeng Ji & Weichun Li, 2022. "A Sustainable and Comprehensive Framework for Knowledge Transfer in MNCs: An Empirical Examination Based on Country, Company and Individual Levels of Chinese MNCs," Sustainability, MDPI, vol. 14(21), pages 1-17, October.
    3. Jianing Shi, 2022. "Formal Institutional Distance and Innovation from OFDI: Evidence from China," Sustainability, MDPI, vol. 14(9), pages 1-19, April.

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