The Effect of Institutional Complexity on MNEs' Innovation Performance: Based on the Perspective of Institutional Logics Theory

Abstract

Abstract: Emerging economy multinational enterprises (MNEs) not only need to face institutional difference between home and host countries, but also between different host countries. Under the background that China is in a critical stage of high-quality economic development and transformation, it is of great significance to understand the effect of institutional complexity on MNEs' innovation performance from the institutional logics perspective. Based on the data of Chinese A-share listed companies from 2007 to 2017, this paper examines the relationship between institutional complexity of host countries and MNEs' innovation performance. Our findings suggest that institutional complexity has a significantly positive impact on MNEs' innovation performance, which is reflected in the increase of the number of patent applications. In addition, we find that the institutional constraints from home country and MNEs' international experience positively moderate the institutional complexity-innovation relationship. Moreover, our results show that institutional complexity promotes MNEs' innovation performance by improving their absorptive capacity. This paper not only confirms the positive effect of institutional complexity on MNEs' innovation performance, thus providing new empirical evidence for MNEs' strategic responses to institutional complexity, but also has important policy implications for the implementation of innovation-driven development strategy.

Key words: institutional complexity, innovation performance, multinational enterprises, internationalization

Shen Liying, Chen Deqiu. The Effect of Institutional Complexity on MNEs' Innovation Performance: Based on the Perspective of Institutional Logics Theory[J]. Management Review, 2024, 36(8): 105-118.

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