Competitive Interdependence,Absorptive Capacity,and Innovation Performance In Chinese OFDI Enterprises

Since 2000,the large-scale Chinese market has attracted an average of 130 million U.S.dollars per day in foreign direct investment,the entry of foreign direct investment has had an important impact on Chinese domestic companies.The entry of foreign direct investment has made Chinese domestic companies facing increasing competition,and gradually into a passive position in this competitive interdependence.Ultimately,it is difficult for domestic companies to gain innovation performance because of the lock-in.Generally,performing OFDI is a common way for domestic companies to get rid of this dependence and lock-in.However,some researches on OFDI show that OFDI has a significant effect on getting rid of this kind of lock-in and improving innovation performance;while some show that the effect of OFDI is not obvious.This type of research believes that the effect of OFDI is related to the absorptive capacity of enterprises.Because absorptive capacity determines the identification,evaluation,digestion,and application of new knowledge for companies.So,does the absorptive capacity really play a role in the implementation of OFDI by domestic companies?If so,what are the differences in the mechanisms of different types of absorptive capacity?In view of this,this paper attempts to put forward a new research perspective—resource dependence theory—to deeply discuss the relationship between the degree of competitive interdependence of foreign companies and the innovation performance of domestic companies in emerging markets.Specifically,this paper believes that with the increase of competition,the competitive interdependence between domestic companies and foreign companies will have an adverse effect on the improvement of domestic companies' innovation performance.Because compared with foreign companies,domestic companies in emerging markets have the liability of localness in innovation,making them very passive in competition with foreign companies.What's more,the occupation of the market by foreign companies and self-protection measures to prevent domestic companies from mimicking learning have made it impossible for domestic companies to learn to imitate.Instead,they have reduced their willingness to innovate because of excessive dependence.In the end,it is difficult for domestic companies to obtain an increase in innovation performance because of the lock-in,which in turn encourages domestic companies to get rid of domestic competition constraints through OFDI.At the same time,considering that the adverse spillover effect of OFDI is greatly affected by the absorptive capacity of enterprises,this paper will categorize OFDI through different absorption capabilities of enterprises,so as to better discuss science-push and demand-pull absorptive capacity impact the negative relationship between the competitive interdependence of domestic companies towards foreign companies and the innovation performance of domestic companies.Using the panel data of Chinese industrial enterprises and List of Foreign Investment Companies in China from 1998 to 2013,and through empirical analysis this paper finds that:The degree of competitive interdependence of domestic companies towards foreign companies in emerging markets has a significant role in limiting innovation performance of domestic companies,namely,the more domestic companies rely on competition,the lower the innovation performance of domestic companies will be.As as a way for domestic companies to get rid of lock-in,the effect of OFDI is often not clear,which is consistent with the empirical results of this paper.That is,on the whole,the enterprise OFDI strengthens the negative relationship of competitive interdependence-innovation performance,but the adjustment effect is not significant.Because OFDI is affected by the absorptive capacity,namely,OFDI with different absorptive capacity has different adjustment effects on competitive interdependence-innovation performance relationship,specifically,science-push absorption-type OFDI can significantly overcome the negative relationship between competitive interdependence and innovation performance;while demand-pull absorption-type OFDI will significantly enhance the negative relationship between competitive interdependence and innovation performance.