Reverse innovations bridging the gap between entrepreneurial orientation and international performance

Abstract

PurposeThis paper aims to elucidate the relationship between entrepreneurial orientation, reverse innovation and international performance of emerging economy multinational enterprises (EMNEs).Design/methodology/approachThe authors analyze archival data of Chinese limited companies between 2010 and 2016, including 11,230 firm-year observations about 1708 firms. In order to test the study’s mediation hypotheses, the authors apply an ordinary least square (OLS) regression.FindingsThe authors find evidence that the entrepreneurial orientation of EMNEs has a positive effect on reverse innovations. Furthermore, the authors find positive effects of reverse innovation on the international performance of EMNEs. This pattern of results suggests that the relationship between entrepreneurial orientation and international performance is partially mediated by reverse innovation.Practical implicationsThe study’s findings help managers in EMNEs to promote reverse innovation by building and using their entrepreneurial orientation. It also helps them to set out and gauge the chances of success of their internationalization strategies. The findings also hold relevance for firms in developed economies as well, as they may understand which emerging economy competitors stand to threaten their positions.Originality/valueThe strategic role of reverse innovations – i.e. clean slate, super value and technologically advanced products originating from emerging markets – has generated considerable research attention. It is clear that reverse innovations impact the international performance of EMNEs. Yet how entrepreneurial orientation influences international performance is still underexplored. Thus, the current study clarifies the mechanism by examining and testing the mediating role of reverse innovation among the entrepreneurial orientation–international performance link.