How does internationalization affect innovation of Chinese MNEs? A revisit amid the U.S.-China trade war

Abstract

The relationship between internationalization and innovation has been a central topic in the research on EMNEs. Elia et al. (2020) draw upon a newly proposed geographic relational perspective to theorize the relationship and find that M&A-based, geographically dispersed, and culturally distant internationalization positively influences innovation of Chinese MNEs, and the impact of M&A investments is more positive when located in developed countries. We acknowledge the importance of the study in terms of its emphasis on the impact of where and how to internationalize over time, but contend that the robustness of the results should be further examined, considering the recent worldwide geopolitical and institutional changes and the transformation of the innovation landscape of Chinese MNEs in the recent decade. Therefore, the present study replicates Elia et al. (2020) by utilizing the patent data not only from the U.S. Patent and Trademark Office (USPTO) but also from China's National Intellectual Property Administration (CNIPA). In addition, we extend our observations to cover the period from 2008 to 2022, taking into account the impact of the U.S.-China trade war starting from 2018. We find that the original findings are only partially confirmed, and there are some substantive changes with the inception of the U.S.-China trade war. A reflection on our differing results, in contrast to the original ones, sheds new light on the relationship between internationalization and innovation of Chinese MNEs in the context of the dynamic global institutional environment.