The Role of Institutional Complexity on Emerging Multinationals' Innovation Outcomes

This study examines the role of institutional complexity from internationalization on emerging market multinationals’ (EMMs) innovation performance. Institutional complexity from EMMs’ internationalization provides the learning opportunities that would improve innovation outcomes, but it also puts extra burden on the management to handle information overload from overextended internationalization. We conceptualize that EMMs’ top management team is an important source of the managerial capability to promote innovation while facing institutional complexity. The innovation performance also depends on the stages of EMMs’ international expansion. The empirical testing utilizes a longitudinal sample of 2,730 expansion steps made by 760 Chinese firms between 2001 and 2010. The results support that institutional complexity generally contributes to Chinese EMMs’ innovation performance, but TMT characteristics, i.e., TMT foreign ties and heterogeneity, become significant in the relationship. In particular, TMT foreign ties have a stronger effect on the relationship at the early stage of international expansion, while TMT heterogeneity matters more at the later stage of international expansion.