Does the Technological Diversification and R&D Internationalization of eMNCs Promote Enterprise Innovation?: An Empirical Study on China's Publicly Listed Companies

Does the Technological Diversification and R&D Internationalization of eMNCs Promote Enterprise Innovation?: An Empirical Study on China's Publicly Listed Companies

Jing Li, Jun Wang
Copyright: © 2021 |Pages: 19
DOI: 10.4018/JGIM.20210901.oa1
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Abstract

Under the background of digital economy, technological diversification and R&D internationalization are important strategic choices for eMNCs, represented by China, to seek advanced technological resources and create competitive advantages. This paper takes China's listed MNCs from 2009 to 2019 as the research object and applies a non-equilibrium panel negative binomial fixed effect regression to investigate the impact mechanism of technological diversification of China's MNCs on enterprise innovation performance and the moderating effect of overseas R&D networks. Results show that the related technological diversification of MNCs has a significant positive impact, and the unrelated technological diversification and their innovation performance are in inverted U-shaped relationship; overseas R&D networks have significant moderating effect while the breadth and depth of the moderating effect are not the same; significant differences exist in the moderating effect of overseas R&D networks due to the heterogeneity of institutional development levels among regions in China.
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Introduction

Digital technologies represented by artificial intelligence, block chains, cloud computing, and big data are promoting the development of the digital economy. Human society is entering a brand-new historical stage marked by digital productivity. Digitalization promotes efficient circulation of real economic elements as well as efficiency changes(Banalieva & Dhanaraj, 2019; Ting & Gray, 2019).The technological innovation of enterprises under the background of the digital economy presents three main trends: first, the highly standardized commodities and services are transformed into complex commodities and personalized services; second, pure offline innovation is transformed into online and offline integration innovation; third, the transformation into the interactive innovation across the whole industrial chain from consumer-side innovation. It requires that MNCs can no longer rely simply on the development mode of traditional single technology, but should broaden the original technology foundation and carry out technology R&D and knowledge exploration in many fields (Kim et al.,2016). Technological diversification strategy has become the key for MNCs to cope with the changes in digital economy market, to break through technology constraints and realize innovative development.

In recent years, scholars have conducted studies on the relationship between technological diversification and innovation performance, but the research conclusions on the relationship between the two have always been divergent. Most study results indicate that technological diversification is beneficial for enterprises to expand their technological capability foundation, promote the use of knowledge across technological boundaries (Hsien et al., 2010; Suzuki & Kodama, 2004), enhance collaboration between R&D activities, and reduce the core rigidities of enterprises’ capability development and path dependence (Garcia, 2006). Therefore, technological diversification is conducive to the improvement of enterprises’ innovation abilities, especially the exploratory innovation abilities (Quintana & Benavides, 2008).However, some scholars hold the opposite view, that technological diversification can easily lead to high costs of integration, coordination, and communication between technologies in different fields, which are not conducive to innovation (Chen, et al., 2013). Some other scholars pointed out that there was a non-linear relationship (Leten & Belderbos, 2007; Huang & Chen, 2010) between technological diversification and innovation performance. Two possible reasons may account for the discrepancies in research conclusions: firstly, most scholars only studied technological diversification as a whole concept, without distinguishing the characteristics of diversified technologies in detail, which covered up the effects of different types of technology resources; secondly, when analyzing the relationship between technological diversification and innovation, existing researches seldom conduct in-depth exploration of the impact mechanism, such as considering the impact of the construction of overseas R&D networks. Although technological diversification can broaden the knowledge base of MNCs and improve the possibility of technological innovation, it only prepares a variety of technological basic resources for innovation activities of MNCs. If MNCs want to realize the synergy of various technologies in the process of market globalization, they also need the coordination and guarantee from overseas R&D networks. Information and communication technologies accelerate the process of economic globalization and enterprise internationalization, promote the construction of global data networks such as industrial globalization layout, cross-border trade and talent flow, and realize the integration and convergence of logistics, capital flow and data flow (Ting & Gray, 2019).

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