Foreign Ownership and External Knowledge Acquisition: A Comparison between International Subsidiaries and Local Firms in China

Abstract

This study examines the relationship between foreign ownership and External Knowledge Acquisition (EKA) in China, and posits that international subsidiaries and local firms exhibit different rationales with regard to EKA. Using nationwide enterprise survey data on 320 Chinese firms, this study tests a model developed from resource dependency theory and institutional theory. We find that foreign ownership positively affects EKA, and that this relationship is moderated by both institution legislation hazards and contract enforcement hazards but with contrasting effects: the positive moderation of the former but the negative one of the latter. This study also provides important implications for the managers of international subsidiaries and local firms regarding their knowledge acquisition strategies.

Keywords:

• foreign ownership
• external knowledge acquisition
• institutional hazards

Note

Notes

1 “World to gain from an innovative China.” The Business Times, July 11, 2011.

Additional information

Funding

This research is supported by the National Natural Science Foundation of China (Grant No. 71772051), and Outstanding Scholar Plan of Fudan University.