Research On Knowledge Spillover Effect Of Outward Foreign Direct Investment Under The Background Of Global Value Chains

As Chinese economy enters a "new normal" development stage,it becomes clear that a continuous economic development path is to rely on technological innovation and industrduiral upgrading.In the context of global value chains,a series of outward foreign direct investment by Chinese multinational corporations have made it possible for Chinese companies to exploit international knowledge spillover.However,the existing literature fails to provide a comprehensive analysis on the antecedents and mechanisms of the knowledge spillover effect of outward foreign direct investment.Therefore,with a combined theoretical lens of knowledge spillover theory,global value chains theory,and the theory of emerging market multinational corporations,this research attempts to develop a comprehensive research framework of the knowledge spillover effects of outward foreign direct investment in the context of global value chains.It aims to analyze the antecedents and mechanisms of knowledge spillover effect and its impact on Chinese companies" innovation performance and global value chain status.This research includes the following three aspects:First,a research on the peer effect of outward foreign direct investment.Based on a merged dataset of Chinese industrial enterprises database and overseas investment company directory,this paper examines the peer effect of outward foreign direct investment,that is.the influence of peer companies on the international investment of Chinese multinational companies.It identifies two imitation behaviors of emerging market multinational companies:Learning-based imitation and profit-driven imitation.Moreover,the study finds that policy uncertainty and export trade networks magnify the impact of these two imitations on foreign direct investment decisions.Second,a research on the reverse knowledge spillover effects of outward foreign direct investment.Based on a regional dataset matched by the statistical yearbook and the database of the World Bank and the United Nations Trade and Development Commission,this paper divides the host countries of Chinese outward foreign direct investment into two major categories:developed economies and emerging economies based on their technological levels.It considers two types of technology gap between China and host countries:objective technology gap and expected technology gap.This study verifies the existence of the reverse knowledge spillover effect of outward foreign direct investment,and its impact on the innovation performance and the global value chain status of Chinese multinational companies.Third,a research on the influence of foreign direct investment on host country technological upgrading.This paper studies the impact of direct investment by Chinese companies on the productivity improvement of countries along the Belt and Road,as well as the moderating effects of the institutional,cultural,and economic distances between host countries and China.This article expands the existing research,both theoretically and empirically.It draws the following conclusions:(1)Peer effect exists in the outward direct investment of emerging market multinational companies.Peer companies have a significant impact on the focal company’s outward foreign investment decision making.Policy uncertainty and export trade networks will magnify the impact of learning-based and profit-driven imitation on outward investment.(2)Outward foreign direct investment has a significant reverse knowledge spillover effect.However,the strength of the knowledge spillover effect depends on the technological level of host countries and the objective and expected technology gap between China and host countries.The reverse knowledge spillover by investment in developed countries has a positive and significant impact on innovation performance and global value chain status,while the investment in emerging economies has a negative impact.The relationship between the reverse knowledge spillover effect by direct investment and domestic innovation performance depends on the objective and expected technological gap.The larger the objective technology gap and the smaller the expected technology gap,the more positive effect of reverse knowledge spillover is.(3)Chinese companies’ international investment promotes the technological progress and productivity growth of host countries.But the knowledge spillover effect of China’s investment depends on the institutional,cultural and economic distance between host countries and China.The knowledge spillover effect of China’s foreign direct investment is stronger in host countries with less institutional and economic distance with China.There is also an inverted U-shaped relationship between cultural distance and the knowledge spillover effect.Specifically,when the cultural distance is low,the knowledge spillover effect increases with the increase of cultural distance;when the cultural distance is high,the knowledge spillover effect decreases with the increase of cultural distance.This research supplements the existing literature on the antecedents and mechanisms of knowledge spillover effects in the context of global value chain.It aims to establish a comprehensive knowledge spillover effect research framework.It also provides managerial implications for multinational company managers on foreign investment decisions and policy makers on the improvement of global value chains status.