Chinese SOEs’ technological upgrading through OFDI: The impact of political ties and subnational institutions. A survey of literature

Abstract

This paper presents a systematic literature review on the relationship between outward foreign direct investment (OFDI) and technological upgrading in Chinese state-owned enterprises (SOEs), emphasizing the moderating role of political ties and subnational institutions. Analyzing 51 core papers from 2011 to 2022, the study synthesizes key theories on how political ties influence Chinese SOEs’ technological upgrading through OFDI. It also finds that political ties affect motivations and resources of SOEs with various types of state ownership and thus affect their OFDI strategies and innovation capabilities. This research further explores the impact of subnational institutions and their interactions with political ties. The findings underscore the perspective that subnational institutions shape a firm’s learning capability, and their impact is moderated by SOEs’ political ties. Finally, the study identifies key issues in SOEs’ technological upgrading through OFDI and offers valuable insights for policymakers and SOE managers. Future research directions are outlined to understand the impact of OFDI on the technological upgrading of Chinese SOEs.