R&D internationalization and innovation performance: the moderating role of financial slack

Xinyang Dong

doi:10.62051/j3e90905

Authors

Xinyang Dong

DOI:

https://doi.org/10.62051/j3e90905

Keywords:

R&D internationalization, innovation performance, financial slack, emerging economies.

Abstract

Among enterprises in emerging economies represented by China, R&D internationalization is an important strategic choice, aiming to obtain advanced technological resources and achieve competitive advantages. Taking listed companies in the information transmission, software and information technology services, and scientific research and technology services industries in China from 2018 to 2022 as research objects, this paper explores the impact of R&D internationalization on innovation performance, and examines the moderating role of financial slack in this relationship from the perspective of slack resources in organizational theory. The results show that there is a positive relationship between R&D internationalization and innovation performance. Further research shows that from the perspective of organizational theory, financial slack will positively strengthen the role of R&D internationalization in promoting corporate innovation performance. This paper discusses the moderating role of financial slack in this relationship for the first time. The research results have important practical implications for enterprises in emerging economies to formulate R&D internationalization strategy and improve innovation performance.

Downloads

Download data is not yet available.

References

Arrow, K. J. (1962). The Economic Implications of Learning by Doing. The Review of Economic Studies, 29(3), 155. https://doi.org/10.2307/2295952.

Awate, S., Larsen, M. M., & Mudambi, R. (2015). Accessing vs sourcing knowledge: A comparative study of R&D internationalization between emerging and advanced economy firms. Journal of International Business Studies, 46(1), 63–86. https://doi.org/10.1057/jibs.2014.46.

Baumol, W. J., Cyert, R. M., & March, J. G. (1964). A Behavioral Theory of the Firm. Journal of Marketing Research, 1(1), 74. https://doi.org/10.2307/3150326.

Bitzer, J., & Kerekes, M. (2008). Does foreign direct investment transfer technology across borders? New evidence. Economics Letters, 100(3), 355–358. https://doi.org/10.1016/j.econlet.2008.02.029.

Bourgeois, L. j. (1981). On the Measurement of Organizational Slack. Academy of Management Review, 6(1), 29–39. https://doi.org/10.5465/amr.1981.4287985.

Chen, C.-J., Huang, Y.-F., & Lin, B.-W. (2012). How firms innovate through R&D internationalization? An S-curve hypothesis. Research Policy, 41(9), 1544–1554. https://doi.org/10.1016/j.respol.2012.06.008.

Cyert, R. M., & March, J. G. (1963). A behavioral theory of the firm. Prentice Hall/Pearson Education.

Gentry, R., Dibrell, C., & Kim, J. (2016). Long–Term Orientation in Publicly Traded Family Businesses: Evidence of a Dominant Logic. Entrepreneurship Theory and Practice, 40(4), 733–757. https://doi.org/10.1111/etap.12140.

Greenley, G. E., & Oktemgil, M. (1998). A Comparison of Slack Resources in High and Low Performing British Companies. Journal of Management Studies, 35(3), 377–398. https://doi.org/10.1111/1467-6486.00098.

Hambrick, D. C., & D’Aveni, R. A. (1988). Large Corporate Failures as Downward Spirals. Administrative Science Quarterly, 33(1), 1–23. https://doi.org/10.2307/2392853.

Khasawneh, A. Y., & Dasouqi, Q. A. (2017). Sales nationality and debt financing impact on firm’s performance and risk: Evidence from Jordanian companies. EuroMed Journal of Business, 12(1), 103–126. https://doi.org/10.1108/EMJB-05-2016-0015.

Lee, J. Y., Xiao, S., & Choi, B. (2021). Unpacking the drivers of emerging market firms’ international joint venture formation: The interplay between technological innovation strategies and home- and host-institutional pressures. Journal of Business Research, 134, 378–392. https://doi.org/10.1016/j.jbusres.2021.05.049.

Levinthal, D. A., & March, J. G. (1993). The myopia of learning. Strategic Management Journal, 14(S2), 95–112. https://doi.org/10.1002/smj.4250141009.

Li, Y., Gao, Y., & Gao, S. (2023). Organizational slack, entrepreneurial orientation, and corporate political activity: From the behavioral theory of the firm. Humanities and Social Sciences Communications, 10(1), 117. https://doi.org/10.1057/s41599-023-01605-1.

Li, Z., Li, M., Han, Y., & Ye, X. (2023). Sustainable Development: R&D Internationalization and Innovation. Polish Journal of Environmental Studies, 32(2), 1645–1659. https://doi.org/10.15244/pjoes/159076.

Lu, L.-H., & Wong, P.-K. (2019). Performance feedback, financial slack and the innovation behavior of firms. Asia Pacific Journal of Management, 36(4), 1079–1109. https://doi.org/10.1007/s10490-018-9634-4.

March, J.G., & Simon, H.A. (1958). Organizations. Wiley.

Marquis, C., & Raynard, M. (2014). INSTITUTIONAL STRATEGIES IN EMERGING MARKETS. Harvard Business School Working Paper, 15, 13.

Mavroudi, E., Kafouros, M., Jia, F., & Hong, J. (2023). How can MNEs benefit from internationalizing their R&D across countries with both weak and strong IPR protection? Journal of International Management, 29(1), 100994. https://doi.org/10.1016/j.intman.2022.100994.

Meyer, K. E., Mudambi, R., & Narula, R. (2011). Multinational Enterprises and Local Contexts: The Opportunities and Challenges of Multiple Embeddedness. Journal of Management Studies, 48(2), 235–252. https://doi.org/10.1111/j.1467-6486.2010.00968.x.

Miller, K. D., & Leiblein, M. J. (1996). CORPORATE RISK-RETURN RELATIONS: RETURNS VARIABILITY VERSUS DOWNSIDE RISK. Academy of Management Journal, 39(1), 91–122. https://doi.org/10.2307/256632.

Myers, S., & Majluf, N. (1984). Corporate Financing and Investment Decisions When Firms Have InformationThat Investors Do Not Have (w1396; p. w1396). National Bureau of Economic Research. https://doi.org/10.3386/w1396.

Papanastassiou, M., Pearce, R., & Zanfei, A. (2020). Changing perspectives on the internationalization of R&D and innovation by multinational enterprises: A review of the literature. Journal of International Business Studies, 51(4), 623–664. https://doi.org/10.1057/s41267-019-00258-0.

Rabbiosi, L., & Santangelo, G. D. (2013). Parent company benefits from reverse knowledge transfer: The role of the liability of newness in MNEs. Journal of World Business, 48(1), 160–170. https://doi.org/10.1016/j.jwb.2012.06.016.

Rahko, J. (2021). R&D internationalization and firm productivity. Does the host country matter? Applied Economics, 53(16), 1807–1825. https://doi.org/10.1080/00036846.2020.1853668.

Sanna-Randaccio, F., & Veugelers, R. (2007). Multinational knowledge spillovers with decentralised R&D: A game-theoretic approach. Journal of International Business Studies, 38(1), 47–63. https://doi.org/10.1057/palgrave.jibs.8400249.

Si, Y., Zhang, Y., & Teng, T. (2021). R&D internationalization and innovation performance of Chinese enterprises: The mediating role of returnees and foreign professionals. Growth and Change, 52(4), 2194–2212. https://doi.org/10.1111/grow.12555.

Tang, C., Tang, Y., & Su, S. (2019). R&D internationalization, product diversification and international performance for emerging market enterprises: An empirical study on Chinese enterprises. European Management Journal, 37(4), 529–539. https://doi.org/10.1016/j.emj.2018.11.003.

Tse, C. H., Yim, C. K. B., Yin, E., Wan, F., & Jiao, H. (2021). R&D activities and innovation performance of MNE subsidiaries: The moderating effects of government support and entry mode. https://doi.org/10.17863/CAM.66492.

Van Beers, C., & Zand, F. (2014). R&D Cooperation, Partner Diversity, and Innovation Performance: An Empirical Analysis. Journal of Product Innovation Management, 31(2), 292–312. https://doi.org/10.1111/jpim.12096.

Vanacker, T., Collewaert, V., & Zahra, S. A. (2017). Slack resources, firm performance, and the institutional context: Evidence from privately held European firms. Strategic Management Journal, 38(6), 1305–1326. https://doi.org/10.1002/smj.2583.

Welch, C., & Paavilainen‐Mäntymäki, E. (2014). Putting Process (Back) In: Research on the Internationalization Process of the Firm. International Journal of Management Reviews, 16(1), 2–23. https://doi.org/10.1111/ijmr.12006.

Wu, J., Wang, C., Hong, J., Piperopoulos, P., & Zhuo, H. (2016). Internationalization and innovation performance of emerging market enterprises: The role of host-country institutional development. Journal of World Business, 51(2), 251–263. https://doi.org/10.1016/j.jwb.2015.09.002.

Zaheer, S. (1995). Overcoming the Liability of Foreignness. Academy of Management Journal, 38. https://doi.org/10.2307/256683.

Zander, U., & Kogut, B. (1995). Knowledge and the Speed of the Transfer and Imitation of Organizational Capabilities: An Empirical Test. Organization Science, 6(1,), 76–92.

Zhao, Q., Lee, B. H., Luo, J., & Chen, H. (2023). R&D Internationalization and Innovation Performance: The Impact of Executives’ Characteristics. Journal of the Knowledge Economy. https://doi.org/10.1007/s13132-023-01418-2.

Zhong, X., Song, T., & Chen, W. (2021). Can R&D internationalization improve EMNES’ innovation efficiency? The moderating effects of TMT human capital. Baltic Journal of Management, 16(2), 190–207. https://doi.org/10.1108/BJM-03-2020-0098.

Zhu, S., Hagedoorn, J., Zhang, S., & Liu, F. (2021). Effects of technological distance on innovation performance under heterogeneous technological orientations. Technovation, 106, 102301. https://doi.org/10.1016/j.technovation.2021.102301.

Liao, Z., Huang, C. & Yao, C. (2016). Organizational resource slack: concept, measurement, cause and effect. Foreign Economics and Management,38(10), 49–59. https://doi.org/10.16538/j.cnki.fem.2016.10.004.