The Impact Of China’s OFDI Breadth On Innovation Performance

In today’s world,new technologies are emerging,industries are being upgraded and transformed,and human society is undergoing major development and changes.Only continuous innovation is the soul of national progress and the inexhaustible power of a country’s prosperity.As General Secretary Xi Jinping said in his speech at the Entrepreneur Symposium held in 2020,"We should be bold in innovation and be the explorer,organizer and leader of innovation and development." For emerging multinationals,international expansion can help companies integrate into the global economy,acquire cutting-edge technologies,and improve their innovation performance by upgrading technology through foreign direct investment.According to the 2022 China Enterprise Globalization Report,despite the global contraction in OFDI,China’s aggressive "Go Global" and "One Belt,One Road" initiatives have led to an unprecedented growth in the scale and geographic scope of outbound OFDI by Chinese multinationals.The unprecedented development and growth of Chinese multinational companies in terms of scale and geographical scope.However,under the impact of populism,protectionism and unilateralism,and the new epidemic,trade frictions are frequent and intensified.How to optimize the geographical layout of OFDI,reasonably grasp the rhythm of international expansion and grasp the opportunities of innovation and development under the complex international situation is an important issue that Chinese multinational enterprises need to face in the new era.Therefore,this paper adopts the data of Chinese listed companies between 2011 and2021 as the research sample.First,a literature review is conducted based on organizational learning theory and outsider disadvantage theory.Then,two mechanisms of action are explained,namely the effect of OFDI breadth on innovation performance and the moderating effect of internationalization pace on this,and the corresponding hypotheses are proposed.Next,the paper constructs two main models of the relationship between OFDI breadth and innovation performance of MNEs,and empirically analyzes the relationship using data from listed companies.The analysis of the models shows that: First,There is a significant inverse "U" nonlinear relationship between the breadth of OFDI and innovation performance of Chinese multinational enterprises,and Chinese multinational enterprises can improve their innovation performance as the breadth of international expansion increases.However,when MNEs expand too much geographically,it has a negative impact on innovation performance.Second,the moderating effect of internationalization rhythm on the relationship between Chinese MNEs’ OFDI breadth and innovation performance is negative.That is,under a certain absorptive capacity constraint,the interval of improving firms’ innovation performance by expanding their internationalization scope will be narrowed for MNEs that adopt irregular expansion of subsidiaries.Finally,the findings of the study are summarized and corresponding reference suggestions are made at both government and firm levels.The recommendations at the government level focus on creating a suitable investment environment,optimizing OFDI support policies,building an OFDI exchange platform for enterprises and conducting regular training sessions for MNEs by relevant departments,so as to help MNEs reduce their outsider disadvantage at the macro level.The suggestions at enterprise level mainly focus on optimizing the access to innovation factors,rational planning of international layout,improving resource integration ability and building the organizational structure of enterprise independent innovation.