Chinese Firm’s International Expansion And Innovation Performance:the Moderating Effect Of Domestic Product Development Experiences

This dissertation focused on the topic about "international expansion driving innovation growth" of Chinese firms. It could be doubted that some firms’domestic product development experiences hinder the international expansion’s effect on innovation performance. Thus, the research question "what about international expansion’s effect on innovation performance under different domestic product development experiences" was proposed. Through literature review, this dissertation found three research gaps. First, previous studies emphasized international expansion’s positive effect on innovation but ignored the influence of domestic product development experience, which could not be ignored because emerging market enterprises accumulate strong product-level capabilities under emerging market environment. Second, negative moderating effect of domestic product development experiences has not been analyzed specifically in the relationship between international expansion and innovation performance. The theoretical contradiction or explanation competition exists (capability transfer, absorption vs. path dependence). Third, different attributes of domestic development experience may play different roles. For example, accumulative attributes (like width and depth), experiences in mature or emerging fields, dynamic experiences may play different roles. Therefore, the author divided the dissertation into four sub-research: accumulative experience’s moderating effect, moderating effects across different product fields, dynamic experiences’ effects and matching mechanism as the long-term evolution of experiences.The first sub-research studied international expansion’influence on innovation performance and the moderating role of accumulative experience (width, depth). Through the data collection based on ODI subsidiary database, product certification database and patent database, a panel including400observations (5time points,80firms, panel data; ICT manufacturing, home appliances, low voltage apparatus and wire/cable) was collected. Through the panel data negative binomial regression analysis, the positive influence of international expansion on innovation performance has been tested. And the negative moderating effect of experience depth has also been found. The results are still confirmed by the robust test (lag factors check and new product count as dependent variable). It is found that the negative moderating effect of experience depth is significant for both advanced-country expansion and developing-country expansion.The second sub-research analyzed the moderating effects of experience width across different product fields (mature or emerging). This sub-research collected175observations panel data (35home appliance firms and5time points). Through the panel data negative binomial regression analysis, the author found that the negative moderating effect of experience width in mature product fields is significant. However, the experience width in emerging product fields has not been found/tested as a significant moderator. Those results are also robust.The third sub-research mainly analyzed dynamic (domestic product development) experience’s moderating role and the different effects between accumulative and dynamic experiences. The author collected panel data including126observations (42firms;3time points;3industries like the sample in sub-research1). Through the panel data negative binomial regression analysis, it is found that both entry dynamic experience and intensity dynamic experience are positive moderators of the relationship between international expansion and innovation performance. It is argued that entry dynamic experience’s effect is robust but intensity dynamic experience’s effect is not. It is also found that entry dynamic experience’s effect are significant in both advanced and developing country expansion. But the intensity dynamic experience only plays an important role in developing country expansion.The forth sub-research is a longitudinal case study. This study chose Haier Group and washing machine SBU as the case to clarify different evolution stages of domestic development experience. The co-evolve/matching of international expansion and influence on innovation are also examined. The results showed that the matching stages between international expansion and product development experience could be divided into3stages:"domestic product copy to overseen","derivative products exploitation(differentiation) in oversea markets","global technology seeking and local development". It is also found that as the domestic product development experience changing, the increasing of international expansion (response to the changing of development experience) could bring higher innovation performance.This dissertation provides some novel points and potential contributions as follows.First, this dissertation found that the domestic product development experience(depth) could decrease the international expansion’s positive effect on innovation. The research results support the explanation of path dependence. Adaptation to domestic market as emerging economy could bring routines, inertia and path dependence. The results provide new evidences for path dependence in knowledge seeking-exploitation across countries. This dissertation explained the source of path dependence from domestic innovation environment, not the rigidity of core technology.Second, this study found that the product development experience (width) in mature product fields could decrease the international expansion’s effect (on innovation performance) significantly. But the effect of experience in emerging fields is not significant. Those findings provide evidences for path dependence brought by domestic innovation environment adaptation (earlier and easier to complete technological acquisition and exploitation). No significant effect of emerging product development experience could support the transition barrier of mixed product portfolio.Third, this dissertation found that the dynamic experiences (entry, intensity) could increase the international expansion’s positive effect on innovation performance. The author indicated that product development dynamic experiences could overcome the path dependence (through promoting capability transfer across countries). Those results provide evidences for dynamic capability of international expansion. In addition, the intensity dynamic effect is not robust, which may support the explanation of path dependence from high intensive development of high related product series. Forth, this dissertation also found that as the domestic product development experience changing, the increasing of international expansion (response to the changing of development experience) could bring higher innovation performance. This result explores the co-evolution (long-term) framework of innovation under domestic environment and international expansion. International expansion should response to the stages of domestic product development experiences.Base on the results and novel points, there are three application insights. First, when the domestic product development experience changes fast, MNE should accelerate the international expansion. The latest dynamic experience not the accumulative experience should be transferred to oversea market. Second, product development experience (width) in mature product fields could decrease the international expansion’s effect (on innovation performance). Firms should avoid using the mature product experience to support the international business in a long term. Third, firms should adjust the international strategy/rhyme according to the changes of domestic product development experience across stages. This dissertation did not mention the oversea product development activities. Some measurement and sampling problems brought limitations of the study. This topic need more research in the future.