The effects of institutional quality and diversity of foreign markets on exporting firms’ innovation

Jie Wu, Zefu Wu and Shuaihe Zhuo

International Business Review, 2015, vol. 24, issue 6, 1095-1106

Abstract: This study examines the role of the institutional quality and diversity of foreign markets on exporting firms’ innovation performance. Building on the institutional economics theory, the institution-based view of international expansion, and the literature on international diversification, this study proposes that expanding into a foreign market with well-developed institutions helps exporting firms improve innovation performance and that a high degree of institutional diversity of multiple foreign markets positively influences firm innovation. The study also suggests that institutional diversity weakens the positive relationship between institutions and firm innovation. The findings provide support for the proposed hypotheses. Implications for both theory and practice are discussed.

Keywords: Incremental innovation; Institutional diversity; Institutional quality; Radical innovation (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (12)

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DOI: 10.1016/j.ibusrev.2015.05.001

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