IDEAS home Printed from https://ideas.repec.org/a/eee/reveco/v94y2024ics1059056024003733.html
   My bibliography  Save this article

Overseas operations, global value chain position and technological innovation

Author

Listed:
  • Gao, Xinyi
  • Dong, Siyuan
  • Liu, Cheng

Abstract

Based on a sample of Chinese listed companies with overseas operations from 2010 to 2020, this study empirically studies the impact of multinational corporations (MNCs) overseas expansion on their technological innovation and the moderating effect of the global value chain position. Based on the combination of internalization innovation theory and global value chain approach, the results of this study show an inverted U-shaped relationship between overseas operations of MNCs and technological innovation due to the simultaneous existence of the learning effect, advantages of economies of scale, internal and external coordination costs, and technology spillover risk, and the above positive and negative effects play different roles at different stages of MNCs’ overseas operations. The moderating effects test find that global value chain position strengthens the positive effect of low degree of overseas operations and weakens the negative effect of high degree of overseas operations on technological innovation. Furthermore, this study also distinguishes the heterogeneity of industry attributes and subsidiary types.

Suggested Citation

  • Gao, Xinyi & Dong, Siyuan & Liu, Cheng, 2024. "Overseas operations, global value chain position and technological innovation," International Review of Economics & Finance, Elsevier, vol. 94(C).
    • Handle: RePEc:eee:reveco:v:94:y:2024:i:c:s1059056024003733
    DOI: 10.1016/j.iref.2024.103381
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1059056024003733
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.iref.2024.103381?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Fauver, Larry & Houston, Joel F. & Naranjo, Andy, 2004. "Cross-country evidence on the value of corporate industrial and international diversification," Journal of Corporate Finance, Elsevier, vol. 10(5), pages 729-752, November.
    2. Farok J Contractor & Sumit K Kundu & Chin-Chun Hsu, 2003. "A three-stage theory of international expansion: the link between multinationality and performance in the service sector," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 34(1), pages 5-18, January.
    3. Herstad, Sverre J. & Aslesen, Heidi Wiig & Ebersberger, Bernd, 2014. "On industrial knowledge bases, commercial opportunities and global innovation network linkages," Research Policy, Elsevier, vol. 43(3), pages 495-504.
    4. Liu, Ting & Li, Xizhuo, 2022. "How Do MNCs Conduct Local Technological Innovation in a Host Country? An Examination From Subsidiaries' Perspective," Journal of International Management, Elsevier, vol. 28(3).
    5. Masaaki Kotabe & Denise Dunlap-Hinkler & Ronaldo Parente & Harsh A Mishra, 2007. "Determinants of cross-national knowledge transfer and its effect on firm innovation," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(2), pages 259-282, March.
    6. Mauri, Alfredo J. & Sambharya, Rakesh B., 2001. "The impact of global integration on MNC performance: evidence from global industries," International Business Review, Elsevier, vol. 10(4), pages 441-454, August.
    7. Nicole Franziska Richter, 2014. "Information Costs in International Business: Analyzing the Effects of Economies of Scale, Cultural Diversity and Decentralization," Management International Review, Springer, vol. 54(2), pages 171-193, April.
    8. David J. Teece, 2008. "Technology Transfer By Multinational Firms: The Resource Cost Of Transferring Technological Know-How," World Scientific Book Chapters, in: The Transfer And Licensing Of Know-How And Intellectual Property Understanding the Multinational Enterprise in the Modern World, chapter 1, pages 1-22, World Scientific Publishing Co. Pte. Ltd..
    9. Stewart Johnston & Angela Paladino, 2007. "Knowledge management and involvement in innovations in MNC subsidiaries," Management International Review, Springer, vol. 47(2), pages 281-302, March.
    10. Marin, Anabel & Sasidharan, Subash, 2010. "Heterogeneous MNC subsidiaries and technological spillovers: Explaining positive and negative effects in India," Research Policy, Elsevier, vol. 39(9), pages 1227-1241, November.
    11. Pearce, Robert D., 1999. "Decentralised R&D and strategic competitiveness: globalised approaches to generation and use of technology in multinational enterprises (MNEs)," Research Policy, Elsevier, vol. 28(2-3), pages 157-178, March.
    12. Anupama Phene & Paul Almeida, 2008. "Innovation in multinational subsidiaries: The role of knowledge assimilation and subsidiary capabilities," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(5), pages 901-919, July.
    13. John H Dunning, 1998. "Location and the Multinational Enterprise: A Neglected Factor?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 29(1), pages 45-66, March.
    14. Ajai S Gaur & Chinmay Pattnaik & Deeksha Singh & Jeoung Yul Lee, 2019. "Internalization advantage and subsidiary performance: The role of business group affiliation and host country characteristics," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(8), pages 1253-1282, October.
    15. Paul Almeida & Anupama Phene, 2004. "Subsidiaries and knowledge creation: the influence of the MNC and host country on innovation," Strategic Management Journal, Wiley Blackwell, vol. 25(8‐9), pages 847-864, August.
    16. Bill McEvily & Akbar Zaheer, 1999. "Bridging ties: a source of firm heterogeneity in competitive capabilities," Strategic Management Journal, Wiley Blackwell, vol. 20(12), pages 1133-1156, December.
    17. George Baker & Robert Gibbons & Kevin J. Murphy, 1994. "Subjective Performance Measures in Optimal Incentive Contracts," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(4), pages 1125-1156.
    18. Gabriel R G Benito & Bent Petersen & Lawrence S Welch, 2019. "The global value chain and internalization theory," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(8), pages 1414-1423, October.
    19. Verbeke, Alain & Kano, Liena, 2015. "The New Internalization Theory and Multinational Enterprises from Emerging Economies: A Business History Perspective," Business History Review, Cambridge University Press, vol. 89(3), pages 415-445, October.
    20. William G. Ouchi, 1979. "A Conceptual Framework for the Design of Organizational Control Mechanisms," Management Science, INFORMS, vol. 25(9), pages 833-848, September.
    21. Isaac, Victor Ragazzi & Borini, Felipe Mendes & Raziq, Muhammad Mustafa & Benito, Gabriel R.G., 2019. "From local to global innovation: The role of subsidiaries’ external relational embeddedness in an emerging market," International Business Review, Elsevier, vol. 28(4), pages 638-646.
    22. Jean-Francois Hennart, 1993. "Explaining the Swollen Middle: Why Most Transactions Are a Mix of “Market” and “Hierarchy”," Organization Science, INFORMS, vol. 4(4), pages 529-547, November.
    23. Riahi-Belkaoui, Ahmed, 1998. "The effects of the degree of internationalization on firm performance," International Business Review, Elsevier, vol. 7(3), pages 315-321, June.
    24. Zeng, Rong & Grøgaard, Birgitte & Steel, Piers, 2018. "Complements or substitutes? A meta-analysis of the role of integration mechanisms for knowledge transfer in the MNE network," Journal of World Business, Elsevier, vol. 53(4), pages 415-432.
    25. Smitha R. Nair & Mehmet Demirbag & Kamel Mellahi, 2015. "Reverse Knowledge Transfer from Overseas Acquisitions: A Survey of Indian MNEs," Management International Review, Springer, vol. 55(2), pages 277-301, April.
    26. Roger Strange & John Humphrey, 2019. "What lies between market and hierarchy? Insights from internalization theory and global value chain theory," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(8), pages 1401-1413, October.
    27. Cher-Hung Tseng, 2015. "Determinants of MNC’s Knowledge Inflows to Subsidiaries: A Perspective on Internalization Advantages," Management International Review, Springer, vol. 55(1), pages 119-150, February.
    28. Hsu, Chia-Wen & Lien, Yung-Chih & Chen, Homin, 2015. "R&D internationalization and innovation performance," International Business Review, Elsevier, vol. 24(2), pages 187-195.
    29. Procher, Vivien D. & Engel, Dirk, 2018. "The investment-divestment relationship: Resource shifts and intersubsidiary competition within MNEs," International Business Review, Elsevier, vol. 27(3), pages 528-542.
    30. Ambos, Björn & Kunisch, Sven & Leicht-Deobald, Ulrich & Schulte Steinberg, Adrian, 2019. "Unravelling agency relations inside the MNC: The roles of socialization, goal conflicts and second principals in headquarters-subsidiary relationships," Journal of World Business, Elsevier, vol. 54(2), pages 67-81.
    31. Ram Mudambi & Pietro Navarra, 2004. "Is knowledge power? Knowledge flows, subsidiary power and rent-seeking within MNCs," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 35(5), pages 385-406, September.
    32. C. Alyson, 2006. "On the choice of in-house production versus outsourcing by multinationals," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 15(2), pages 231-254.
    33. Ziyi Wei & Quyen T. K. Nguyen, 2020. "Chinese Service Multinationals: The Degree of Internationalization and Performance," Management International Review, Springer, vol. 60(6), pages 869-908, December.
    34. Krapl, Alain A., 2015. "Corporate international diversification and risk," International Review of Financial Analysis, Elsevier, vol. 37(C), pages 1-13.
    35. Liena Kano, 2018. "Global value chain governance: A relational perspective," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(6), pages 684-705, August.
    36. Perri, Alessandra & Andersson, Ulf & Nell, Phillip C. & Santangelo, Grazia D., 2013. "Balancing the trade-off between learning prospects and spillover risks: MNC subsidiaries’ vertical linkage patterns in developed countries," Journal of World Business, Elsevier, vol. 48(4), pages 503-514.
    37. Elitsa R Banalieva & Charles Dhanaraj, 2019. "Internalization theory for the digital economy," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(8), pages 1372-1387, October.
    38. Winfried Ruigrok & Wolfgang Amann & Hardy Wagner, 2007. "The internationalization-performance relationship at Swiss firms: A test of the S-shape and extreme degrees of internationalization," Management International Review, Springer, vol. 47(3), pages 349-368, June.
    39. Israel Shaked, 1986. "Are Multinational Corporations Safer?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 17(1), pages 83-106, March.
    40. Tailan Chi & Paul Nystrom, 1998. "An economic analysis of matrix structure, using multinational corporations as an illustration," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 19(3), pages 141-156.
    41. Klein, Benjamin & Murphy, Kevin M, 1997. "Vertical Integration as a Self-Enforcing Contractual Arrangement," American Economic Review, American Economic Association, vol. 87(2), pages 415-420, May.
    42. Rajneesh Narula & Christian Geisler Asmussen & Tailan Chi & Sumit Kumar Kundu, 2019. "Applying and advancing internalization theory: The multinational enterprise in the twenty-first century," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(8), pages 1231-1252, October.
    43. Harris, Milton & Raviv, Artur, 1979. "Optimal incentive contracts with imperfect information," Journal of Economic Theory, Elsevier, vol. 20(2), pages 231-259, April.
    44. Jasjit Singh, 2007. "Asymmetry of knowledge spillovers between MNCs and host country firms," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(5), pages 764-786, September.
    45. Belderbos, René & Leten, Bart & Suzuki, Shinya, 2023. "International R&D and MNCs' innovation performance: An integrated approach," Journal of International Management, Elsevier, vol. 29(6).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rajneesh Narula & Christian Geisler Asmussen & Tailan Chi & Sumit Kumar Kundu, 2019. "Applying and advancing internalization theory: The multinational enterprise in the twenty-first century," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(8), pages 1231-1252, October.
    2. Klaus E. Meyer & Chengguang Li & Andreas P. J. Schotter, 0. "Managing the MNE subsidiary: Advancing a multi-level and dynamic research agenda," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 0, pages 1-39.
    3. Liu, Ting & Li, Xizhuo, 2022. "How Do MNCs Conduct Local Technological Innovation in a Host Country? An Examination From Subsidiaries' Perspective," Journal of International Management, Elsevier, vol. 28(3).
    4. Klaus E. Meyer & Chengguang Li & Andreas P. J. Schotter, 2020. "Managing the MNE subsidiary: Advancing a multi-level and dynamic research agenda," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(4), pages 538-576, June.
    5. Rong (Ratchel) Zeng & Birgitte Grøgaard & Ingmar Björkman, 2023. "Navigating MNE control and coordination: A critical review and directions for future research," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 54(9), pages 1599-1622, December.
    6. Alessandra Perri & Ulf Andersson, 2012. "Knowledge outflows from foreign subsidiaries: The tension between knowledge creation and knowledge protection," Working Papers 18, Venice School of Management - Department of Management, Università Ca' Foscari Venezia.
    7. Perri, Alessandra & Andersson, Ulf, 2014. "Knowledge outflows from foreign subsidiaries and the tension between knowledge creation and knowledge protection: Evidence from the semiconductor industry," International Business Review, Elsevier, vol. 23(1), pages 63-75.
    8. Scott-Kennel, Joanna & Saittakari, Iiris, 2020. "Sourcing or sharing in MNE networks? National headquarters and foreign subsidiaries as knowledge conduits in SMOPECs," International Business Review, Elsevier, vol. 29(1).
    9. Blomkvist, Katarina & Kappen, Philip & Zander, Ivo, 2014. "Superstar inventors—Towards a people-centric perspective on the geography of technological renewal in the multinational corporation," Research Policy, Elsevier, vol. 43(4), pages 669-682.
    10. Thomas J. Hannigan & Alessandra Perri & Vittoria Giada Scalera, 2016. "The Dispersed Multinational: Does Connectedness Across Spatial Dimensions Lead to Broader Technological Search?," Working Papers 11, Venice School of Management - Department of Management, Università Ca' Foscari Venezia.
    11. Zhang, Feng & Jiang, Guohua & Cantwell, John A., 2019. "Geographically Dispersed Technological Capability Building and MNC Innovative Performance: The Role of Intra-firm Flows of Newly Absorbed Knowledge," Journal of International Management, Elsevier, vol. 25(3), pages 1-1.
    12. Si Zhang & Shasha Zhao & Ioannis Bournakis & Robert Pearce & Marina Papanastassiou, 2018. "Subsidiary roles as determinants of subsidiary technology sourcing: empirical evidence from China," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 35(2), pages 623-648, August.
    13. Buckley, Peter J. & Enderwick, Peter & Hsieh, Linda & Shenkar, Oded, 2024. "International business theory and the criminal multinational enterprise," Journal of World Business, Elsevier, vol. 59(5).
    14. Liang Chen & Sali Li & Jiang Wei & Yang Yang, 2022. "Externalization in the platform economy: Social platforms and institutions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(8), pages 1805-1816, October.
    15. Wu, Yan & Strange, Roger & Shirodkar, Vikrant, 2022. "Lateral knowledge transfer and foreign affiliate performance: The importance of affiliate strategic roles," Economic Modelling, Elsevier, vol. 116(C).
    16. Smeets, Roger & Bosker, E.M., 2011. "Leaders, laggards and technology seeking strategies," Journal of Economic Behavior & Organization, Elsevier, vol. 80(3), pages 481-497.
    17. Persson, Magnus, 2006. "The impact of operational structure, lateral integrative mechanisms and control mechanisms on intra-MNE knowledge transfer," International Business Review, Elsevier, vol. 15(5), pages 547-569, October.
    18. Zhang, Feng & Jiang, Guohua & Cantwell, John A., 2015. "Subsidiary exploration and the innovative performance of large multinational corporations," International Business Review, Elsevier, vol. 24(2), pages 224-234.
    19. Yang, Yong & Driffield, Nigel, 2022. "Leveraging the benefits of location decisions into performance: A global view from matched MNEs," Journal of Business Research, Elsevier, vol. 139(C), pages 468-483.
    20. Jean-François Hennart, 2019. "Digitalized service multinationals and international business theory," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(8), pages 1388-1400, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:reveco:v:94:y:2024:i:c:s1059056024003733. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620165 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.