The role of international institutional complexity on emerging market multinational companies’ innovation

Jie Wu*, Seung Ho Park

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

13 Citations (Scopus)

Abstract

Research Summary: This study examines the role of international institutional complexity, which is defined as the scope and multiplicity of institutional dimensions across foreign markets, on emerging market multinational companies’ (EMMCs) innovation performance. We propose that international institutional complexity provides learning opportunities for EMMCs’ innovation performance but also incurs higher management costs to handle information overload from overextended internationalization. We further propose that the host exposure and the heterogeneity of an EMMC's top management team (TMT) moderate the main effect of international institutional complexity on EMMC innovation. The empirical testing utilizes a longitudinal panel dataset of 7,072 foreign expansion steps by 767 Chinese firms from 2001 and 2010 and offers strong support for the proposed hypotheses. Managerial Summary: Despite the emergence of EMMCs over the past 30 years, there is little understanding of how international institutional complexity impacts EMMCs’ innovation capabilities. By analyzing a longitudinal panel dataset of 7,072 foreign expansion steps by 767 Chinese firms from 2001 and 2010, we find that the international institutional complexity of an EMMC has an inverted U-shaped impact (first increasing and then decreasing) on its innovation, such that a moderate level of international institutional complexity generates the most innovation output. We also find that TMT host exposure and TMT heterogeneity positively moderate the relationship between international institutional complexity and EMMCs’ innovation performance. Our study contributes to better understanding EMMCs’ international strategies in enhancing their innovation capabilities.

Original languageEnglish
Pages (from-to)333-353
Number of pages21
JournalGlobal Strategy Journal
Volume9
Issue number2
Early online date1 Sep 2017
DOIs
Publication statusPublished - May 2019

Keywords

  • emerging market multinational companies
  • innovation
  • international institutional complexity
  • TMT heterogeneity
  • TMT host exposure

Fingerprint

Dive into the research topics of 'The role of international institutional complexity on emerging market multinational companies’ innovation'. Together they form a unique fingerprint.

Cite this