A Dynamic Model of Internationalization and Innovation in Emerging Market Enterprises: Knowledge Exploration,...

Area of Science:

• Business Administration
• International Business
• Innovation Management

Background:

• Emerging market enterprises (EMEs) face unique challenges and opportunities in global markets.
• Organizational learning theory provides a framework for understanding how firms adapt and grow.
• The role of institutional factors, such as state ownership, is crucial in shaping firm strategies in emerging economies.

Purpose of the Study:

• To investigate the dynamic relationship between internationalization and innovation in EMEs.
• To examine the moderating effect of state ownership on the internationalization-innovation nexus.
• To integrate knowledge exploration, transformation, and exploitation perspectives with an institutional viewpoint.

Main Methods:

• Utilized a panel dataset of publicly listed Chinese firms spanning from 2007 to 2018.
• Employed quantitative analysis to explore the interrelationships between internationalization, innovation input, and innovation output.
• Applied regression analysis to assess the moderating role of state ownership.

Main Results:

• Internationalization positively influences innovation input, which subsequently enhances innovation output in EMEs.
• A dynamic upward spiral exists where higher innovation output encourages further internationalization.
• State ownership positively moderates the link between innovation input and output but negatively moderates the relationship between innovation output and internationalization.

Conclusions:

• Internationalization and innovation form a mutually reinforcing cycle in emerging market enterprises.
• State ownership acts as a double-edged sword, promoting innovation input but potentially limiting international expansion.
• Findings contribute to a nuanced understanding of firm internationalization and innovation in institutional contexts.