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ABSTRACT Institutional distance is the difference in institutional environments between a multinational company’s host country and its home country. This article explores the effects of formal and informal institutional distance… Click to show full abstract
ABSTRACT Institutional distance is the difference in institutional environments between a multinational company’s host country and its home country. This article explores the effects of formal and informal institutional distance (IID) on the innovation performance of Chinese multinationals with outward foreign direct investment (OFDI), as well as the moderating role of organizational learning in the relationship. The results suggested that a formal institutional distance (FID) paradox existed between the FID and OFDI firms’ innovation performance; the informal institutional distance inhibited the technology transfer from foreign subsidiaries to their parent companies and the growth of the parent companies’ innovation performance; exploratory learning can effectively attenuate the negative influence of IID on OFDI firms’ innovation performance.
Journal Title: Emerging Markets Finance and Trade
Year Published: 2019
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