Foreign ownership and novelty of product innovations in China
Author(s)
Urem, Branka
Perez, Ludovico Alcorta
An, Tongliang
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Abstract
This paper examines a relationship between foreign ownership and innovation novelty in the context of host advanced developing economies. The analysis is focused on two dimensions of
product innovation novelty, the novelty of introduced innovations and the economic benefits
from introduced novelty. We find that foreign affiliates do not have higher odds than domestic
firms to introduce product innovations of higher novelty. Indeed, the findings indicate that the
higher odds of foreign firms of introducing innovations of higher novelty are moderated by
exploitation of ownership advantages and by a host market orientation. However, we find that foreign affiliates have higher odds to capture higher economic benefits from product innovations
of higher novelty than domestic firms. Hence, although foreign affiliates are not higher up on an
innovation novelty ladder than domestic firms, they replenish their product and innovation
portfolio with innovations of higher novelty at a faster rate than domestic firms.
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Date
2008-09
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Proceedings