Overseas R&D, domestic R&D, and parent company innovation performance in emerging market

Abstract

Seeking research and development (R&D) capacity overseas is fast becoming an important leapfrogging strategy for emerging market enterprises. Combining knowledge‐based and institutional‐based views, this study develops an analytical framework for the impact of overseas and domestic R&D on the innovation performance of parent companies. Using panel data of 185 enterprises in China from 2012 to 2020, we find that overseas R&D significantly improves the innovation performance of the parent company; domestic R&D has a significant promoting effect on the innovation performance of the parent company, also playing a partial mediating role between overseas R&D and innovation performance of the parent company. Regional institutional quality positively moderates the relationship between overseas and domestic R&D. Our study contributes to a deeper understanding of the pathways and mechanisms through which overseas R&D affects emerging‐market firms' innovation performance.