The Impact of International Expansion on
Innovation Performance: The Moderating Role
of International Diversity and Human Capital
MSc Business Administration: International Management – Master Thesis
ZILUO PENG (11404272)
Name: Ziluo Peng
Student Number: 11404272
Supervisor: Dr. Mashiho Mihalache
Second supervisor: Dr. Michelle Westermann-Behaylo Submission Date: 23.06.2017
Statement of originality
This document is written by Student Ziluo Peng who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.
The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
Abstract
Owing to the increasing competition, emerging multinational enterprises need to use innovation as a strategy to compete for both domestic and international markets. Yet still, there are constraints and obstacles exist for technological development in the home market. Enterprises from emerging countries often need to expand to international markets for acquiring advanced resources. Therefore, in our study, we argue that the international expansion as a catch-up strategy for emerging economies, and analyze how could internationalization mode affect the firm’s innovation performance. Furthermore, based on the resource-based view and dynamic capabilities, we suggest that international diversity and the intellectual human resource may have the impact on the relationship between internationalization and innovation performance.
The sample of the study selected from Chinese high-tech industries. According to the empirical test, the results of the research support the hypothesis that different entry modes would have a different effect on innovation performance. In addition to that, the empirical testing also supports the moderating influence of international diversity and educated human resources on the relationship between export and innovation performance. The conclusion also provides useful theoretical guidance for Chinese enterprises to enhance innovation performance.
Keywords: Emerging Economy, Innovation Performance, International Expansion,
Table of contents
1. Introduction ___________________________________________________________ 4
2. Literature Review ______________________________________________________ 8
2.1 Emerging Market Enterprises _________________________________________________ 8 2.2 International Expansion _____________________________________________________ 11 2.3 International Diversity ______________________________________________________ 13 2.4 Educated Human Resources _________________________________________________ 15
3. Theoretical Framework ________________________________________________ 18
3.1. International Expansion and Innovation Performance ______________________________ 19 3.2. The Moderating Role of International Diversity __________________________________ 21 3.3. The Moderating Role of Educated Human Resources ______________________________ 23
4. Methodology _________________________________________________________ 26
4.1. Sample and Data Collection _________________________________________________ 26 4.2. Variables ________________________________________________________________ 28 4.2.1. Dependent Variable ___________________________________________________ 28 4.2.2. Independent Variables _________________________________________________ 28 4.2.3. Moderating Variables __________________________________________________ 29 4.2.4. Control Variables _____________________________________________________ 29 4.3 Empirical Models __________________________________________________________ 30 5. Analyses and Results __________________________________________________ 32 5.1. Correlation testing _________________________________________________________ 32 5.2. Regression Analyses _______________________________________________________ 34 5.2.1. Direct Effects _________________________________________________________ 34 5.2.2. Moderating Effects ____________________________________________________ 35 6. Discussion ___________________________________________________________ 37 6.1. Findings _________________________________________________________________ 37 6.2. Academic Relevance and Managerial Implications ________________________________ 40 6.3. Limitations and Future Research ______________________________________________ 43
7. Conclusion ___________________________________________________________ 44
1. Introduction
Emerging economy is the concept that appeared in recent years and gradually attracted increasing attention among scholars. Since this market poses the unique characteristics, which makes it necessary to analyze its performance in a different way. Emerging market has experienced continuous growth, and the firms from the developing economies have also shown the great potential (Meyer & Tran, 2006). In the twenty-first century, rapid technological innovation reduced costs and uncertainties for companies to enter the foreign country; the global value chain became interconnected; liberalization of foreign economic policies made it easier for emerging multinationals to export or enter the international markets (Garrett, 2000). Those reasons mentioned above fuel the emerging economies expanded to the international market for seizing more market opportunities in a broader context. The increasing participation of emerging market enterprises in global competition is an intensifying phenomenon nowadays (Kotabe & Kothari, 2016). It is notable that there are certain disadvantages when the emerging market multinational enterprises (EMNEs) entering the international market, such as the late-mover disadvantage. Being a late entrant may lead to the difficulties for emerging multinationals to compete against global giants (Bartlett & Goshal, 2000). Therefore, it is becoming more necessary for the companies to be innovative to compete with their competitors in the foreign countries. On the other hand, the political and economic transition that developing countries have gone through will open the domestic market to the international environment (Meyer & Tran, 2006). In other words, this openness would encourage the competition in the home market, especially after more foreign
competitors entered, and it would also escalate the challenges of the emerging market enterprises. This fact also suggests the need for those companies to increase their firm-specific advantages (Elango & Pattnaik, 2011).
When it comes to the study of emerging countries, most of the existing literature analyzed the effect of institutional environment on firm’s innovation performance (Wu, 2013, Howell, 2016, Wu, Wang, Hong, Piperopoulos, and Zhuo, 2016, Barasa, Knoben, Vermeulen, Kimuyu, and Kinyanjui, 2017) but has paid less attention to how knowledge transfer been affected by internationalization and the geographical diversification when enterprises trying to improve their innovative ability. On the other hand, the research on the international expansion often use the financial performance of the firm as the indicator (Lu & Beamish, 2001, Ramirez-Aleson & Espitia-Escuer, 2001), and mainly take enterprises in developed countries as the sample. Moreover, the conclusion that international expansion could lead to better performance is under uncertainty (Rhee & Cheng, 2004, Liesch, Welch, and Buckley, 2011). Indeed, expansion is rather a necessary but not sufficient requirement for the innovation outcome. Since the innovative ability could be affected by external factors, some enterprises may not benefit from the international venturing to developed countries. Most of the scholars support that international expansion has a positive effect on innovation performance of enterprises (Awate, Larsen and Mudambi, 2015, Yiu, Lau and Bruton, 2007). They believe that having access to diversified innovative resources and technology-learning opportunities in the global market could significantly enhance the company's innovation performance (Luo & Tung, 2007). Others make an argument on the gap between knowledge
acquiring and internal transfer, suggest that the difficulty of coordinating across distributed R&D units might even have a negative effect on the innovate performance of a firm (Singh, 2008). In the long run, international expansion is not just about exploiting the firm's competitive advantage in the foreign market, in order to be successful, there is a need to be involved in the local market network. The influence of social network on innovation performance should have different manifestations in different entry mode (Shaver, 1998).
Based on the discussion above, the research question is the following:
1) To what extent the degree of internationalization would affect the innovative performance when the company expands to the foreign market?
2) Would intellectual human capital have the impact on the innovation performance?
3) Will the entry modes influence the innovation performance of a company?
This paper will examine the firms from the Chinese market, analyzing firm’s performance related to the innovation activities after expanded to international markets. Since that the Chinese government has promoted future sustainable growth by emphasizing in earnest the promotion of ‘indigenous’ innovation capabilities (Howell, 2016); meanwhile, the country has significantly increased its outward foreign direct investment in recent years (Wu et al., 2016). Existing research is focusing on the relationship between international expansion and financial performance of the firm, by using ROA, ROE and other financial indicators to determine the impact of market expansion on firm performance. This approach
would be insufficient to remove other factors that also have the impact on firm’s financial performance. Moreover, most of the enterprises in emerging market enter the foreign market based on the need of acquiring advanced technology rather than gaining profit (Luo & Tung, 2007), hence the most fundamental indicator of the success of a company’s international expansion is the innovation outcome. Based on that, this study will use innovation performance of EMNEs as the dependent variable. Furthermore, the paper did not take market expansion as the single subject, we take into consideration that different entry mode may have the different impact on innovation performance and knowledge transfer. The FDI and export have been used as the independent variable in the paper, as they are most commonly used approach for Chinese companies to expand into the international market. Lastly, in the paper, we introduced dynamic capacity to analyze the moderating effect of human capital on the relationship between internationalization and innovation performance. And in this way, the study could provide a practical thinking for enterprises about how to facilitate the innovative ability.
The structure of the thesis as follows: the paper begins with the theoretical background of the main concepts as the first chapter. In this section, the literature on the relationship characteristics is reviewed in depth, including the relationship between these attributes and innovation performance. Secondly, the research model and hypotheses are addressed in the section of theoretical framework. The following section is the methodology, the content contains the data sample description, the collecting processes, and how those variables being measured. In the analysis section, the empirical results are presented and the discussion based
on this is given. Finally, we present the academic and managerial significance of this study and put forward the limitations and suggestions for the future research.
2. Literature Review
We will review the current literature on the topic of relevant concepts in the first chapter, so as to provide a comprehensive theoretical background for the discussion in the next section. First, since the paper is based on the analysis of emerging economies, the definition and existing literature on this topic will be given as the foundation for the further discussion. In addition to that, the influence of international expansion on firm’s innovation performance is mentioned. Finally, the literature about the international diversity and educated human resources would be stated for further address the hypotheses of the thesis in the next section.
2.1 Emerging Market Enterprises
The emerging economy is not a term with the consolidated definition among the existing literature; the concept is widely described as the newly opened market with high economic growth. Meyer & Tran (2006, p.180) define emerging economy, as “economies with high growth or growth potential, but there is no sophistication of the institutional framework compares to developed countries”. Therefore, companies from emerging economies could have certain constraints when operating in the market, such as the relatively underdeveloped infrastructure framework and the backward technological ability (Ramamurti, 2012, Meyer & Tran, 2006, Luo, Zhao, Wang, and Xi, 2011). Those firms originating from emerging market
are called emerging market multinational enterprises (EMNEs) which is defined by Luo and Tung (2007, p.482) as the “international companies that originated from emerging markets and are engaged in outward FDI, where they exercise effective control and undertake value-adding activities in one or more foreign countries”. Since emerging multinationals are often latecomers in global competition, the possession of firm-specific ownership advantage may not be sufficient for them to be competitive when entering the international market (Yiu, et al., 2007). Due to the backwardness of economy and technology in their current situation, it seems that EMNEs ought not to expand to the outside market. However, Ramamurti (2012) argue that companies from emerging economies do possess ownership advantages but in a different form compare to those in the developed market. He further addressed ownership advantages attributed to EMNEs is their deep understanding of the consumer’s needs in the local market, the ability to operate in an underdeveloped business environment, the ability to produce goods and services at ultra-low cost, the ability to make good enough products that could meet requirements of local customers.
China is a particularly suitable sample for this study, not only because the Chinese government has promoted future sustainable growth by emphasizing in earnest the promotion of ‘indigenous’ innovation capabilities (Howell, 2016); but also, the country has significantly increased its outward foreign direct investment in recent years (Wu et al., 2016). Comparing to firms in developed markets, Chinese multinational companies lack internal R&D capabilities, which they cannot develop rapidly because of time compression diseconomies (Kafouros, Wang, Piperopoulos, and Zhang, 2015). Not like companies in the developed
market that had more time to build capacities, multinational firms in China are at different stages of the revolution. And it is only a time issue for emerging multinational enterprises, like those from China, to increase and enhance their ownership advantages to catch up enterprises in developed countries (Ramamurti, 2012).
Under the Resources-based View, one of the characteristics of Chinese firms is that they go abroad without superior resources (Peng, 2012). Technologies of Chinese multinationals are far behind those in advanced economies. Besides that, there is also a lack of managerial resources for Chinese firms, many of executives ignorant of the ‘rules of the game’ (Peng, 2012). Therefore, the ability for firms to leverage their comparative advantages and to learn from developed market is extremely important for Chinese firms to compete with foreign countries. Recently, Chinese government stressed the need to seriously promote the ‘indigenous’ innovation to promote economic growth (Howell, 2016). As the results of this strategy, China has successfully shifted from low-cost manufacturing economy to high-tech economy. Although the relative innovation has achieved considerable success, several obstacles for China's innovative behavior constitutes a serious risk, including intellectual property theft, low talent pool, poor institutional protection, lack of market demand, financial constraints and other issues (Howell, 2016).
According to above arguments, we can conclude that emerging economies need to use innovation as a strategic plan to compete for both domestic and international markets since they are lacking resources for the innovative development. Nevertheless, there are constraints
and obstacles exist for technological development in the home market. Enterprises from emerging countries often need to expand to international markets for acquiring advanced resources.
2.2 International Expansion
Krin (1991) argues that operations in the single country is no longer sufficient for companies to run long-lasting production until exhausted manufacturing scale economies, and support competitive position in research and development spending. When the domestic market reached maximum capacity, firms would search for opportunities posted by outside market. There are several distinctive opportunities related to the global participation for firms identified by international management literature over years. Vernon (1966) based on product life cycle theory, argues that enterprises will follow the product life cycle to reduce the cost of production, transformed from product output to technology or capital output. With the transfer of production to other countries, the degree of internationalization of the business has increased; Johanson and Vahlne (1977) based on the or organizational behavior put forward the internationalization process model, state that the internationalization of enterprises should be regarded as a process, the company will gradually increase the international commitments according to its performance in the foreign market. The scholars supported the argument that international expansion could give firms opportunities to increase returns with lower risk (Kim, Hwang, and Burgers, 1993). The high degree of uncertainty exists in emerging economies, firms in those markets would seek market opportunities in developed countries to
reduce dependence on the domestic markets (Musteen, Datta, and Francis, 2014). At the beginning stage of the internationalization of the emerging market firms, the domestic market is the primary target. Product differentiation as one of the competitive advantages could help companies to benefit from the opportunities provided by the home market but is insufficient for them to compete in the global market (Banalieva & Sarathy, 2011). EMNEs invest in physically or economically distant countries because their strategies are by reason of exploiting national differences rather than similarities (Ghemawat, 2008, Ramamurti, 2012).
Firms from emerging markets enter international markets for other reasons than asset exploitation. Different from multinationals in advanced economies or the newly industrialized economies, emerging market enterprises have benefited a lot through inward foreign direct investment in the early path of internationalization, particularly by original equipment manufacturing and joint venture (Luo & Tung, 2007). By partnering with their international rivals, the firms would be able to learn and develop new skills and competencies, which could help companies to overcome the constraints of the home market, thus to survive in the international market (Luo & Tung, 2007, Banalieva & Sarathy, 2011, Rabbiosi, Elia and Bertoni, 2012). For emerging market enterprises, the international expansion is more than reaching the economies of scale, rather a catch-up strategy. Luo and Tung (2007) suggest a ‘springboard’ perspective, which describes the emerging economies expand to the international market to acquire critical resources to reduce their market constraints at home. Based on this strategic motivation, the function of subsidiaries from emerging market
enterprises is no longer to exploit competitive advantage of the parent company but to initiate reverse knowledge flow back to the headquarter (Awate, Larsen and Mudambi, 2015).
The resource-based theory argues that differences in resources and competencies among firms are the source of competitive advantage, especially those with four characteristics that are valuable, scarce, immeasurable, irreplaceable resources and abilities (Barney, 1991). If a company want to improve the competitive advantage of companies, taking advantage of these resources and capacity to become the focus of resource content of the central content is important. Some scholars have used resource concepts to explain the internationalization patterns and performance of firms entering the international market (Verona, 1999, Terziovski, 2010).
2.3 International Diversity
International diversity, referring to the business scope of the foreign market operations for a company, meaning that firms are increasingly relying on foreign markets as the way to grow and improve its financial performance (Tallman & Li, 1996). Thus, international diversification reflects the significant cultural and technological variations in the different markets and segments where a company undertakes foreign operations (Zahra, Ireland, and Hitt, 2000). According to previous studies, the international diversity could be summarized by following five components: which are (1) the number of countries the company operates, (2) the technological diversity of access to foreign markets, (3) cultural and societal differences, (4) the geographical diversity of global markets, (5) the number of targeted
market segments (Tallman & Li, 1996, Kidd & Teramoto, 1995, Hofstede, 1980, Sambharya, 1995, Morrison & Roth, 1992, Zahra et al., 2000). This is the option that could reduce the risk that global companies are facing from their competitors. Scholars (Rugman, 1976) have adopted a portfolio approach that claims that international diversification further expands market risk and stabilizes cash flow. Secondly, the diversity of national markets allows companies to more easily select production and procurement sites to other more favorable national markets, thereby reducing national interest rates, wage rates and unfavorable changes in commodity and raw material prices (Kim et al., 1993). Learning is one of the fundamental objectives of a company that pursues geographical operation diversity (Shearmur, Doloreux, and Laperriere, 2015). It refers to learning from national differences and economies of scale and/or scope, which is one of the critical sources of competitive advantage (Yiu, et al., 2007). The diversity of entrepreneurs' international business environment enhances the knowledge base through interactive learning that interacts with local knowledge bases and different innovation systems (Ghoshal, 1987, Zahra et al., 2000). International business scholars agree that international diversification offers several advantages for enterprises. For example, it provides an opportunity to leverage opportunities and deficiencies in the foreign market through internalization, companies can also improve their efficiency by establishing their own subsidiaries to expand rather than using export markets in international markets when facing the transaction cost or market failures (Ramirez-Aleson & Espitia-Escuer, 2001).
On the other hand, the geographical diversity of operations can also lead to the raising governance costs of the firm, according to the transaction cost theory (Geringer, Tallman, and Olsen, 2000). It is argued that the internationalization of EMNEs is faster than the suggested phase pattern and targeting wrong countries (Ramamurti, 2012). International diversification leads to rising internal transaction costs, the liability of foreignness and foreign exchange exposure, and thus may increase systemic risk (Majocchi & Strange, 2012). Hennart (2007) concludes that the rise in systemic risk may offset the decline in non-systemic risk, and the risk may be increased because of the international diversity. However, the emerging markets are still in the early stage of the international expansion, in other words, the enterprises from transition economies would not face the increasing governance cost since they are focusing on a relatively narrow market (Musteen, Datta, and Francis, 2014). In conclusion, the international diversification could bring enormous benefits to the company (Luo et al., 2011). Nonetheless, enterprises need to enhance the internal ability of the organization to reduce the possibilities of increasing coordination costs.
2.4 Educated Human Resources
The world stepped into the age in which the most critical resource is the knowledge instead of the capital, the global competition converted more technologically intensive (Awate et al., 2015). Consequently, it is increasingly difficult for the firm to attain and sustain a competitive advantage through the reallocation of capital and other fixed assets (Bresman, Birkinshaw and Nobel, 2010). Historically, strategic management has focused on how to
acquire and maintain a competitive advantage as a research focus in this field (Teece, Pisano and Shuen, 1997). The resource-based view is an influential theoretical framework for understanding how the competitive advantage within the company is achieved and how to sustain this advantage over time (Barney, 1991, Peteraf, 1993, Eisenhardt & Martin, 2000). Based on this theory, the continuing competitive advantage of the firm derives from the valuable, scarce, immeasurable, irreplaceable resources owned and controlled by the firm. These generalized resources include tangible assets (equipment), and intangible assets (management capabilities, enterprise development processes/paths, etc.) (Barney, 1991). However, resource-based theory only answers the source of the advantages from a static point of view and did not explain how to obtain these resources. At the same time, it cannot explain the mechanism from the resources to the competitive advantage (Eisenhardt & Martin, 2000). Based on the reasons mentioned above, scholars extended resource-based view into the dynamic capability (Teece et al., 1997). Eisenhard and Martin (2000, p.1107) define the dynamic capability as “the organizational and strategic routines by which firms achieve new resource configurations as markets emerge, collide, split, evolve, and die”. It refers to the capability that facilitates companies to identify potential technological changes and then adapt to it through innovation (Hill & Rothaermel, 2003). Following the perspective of dynamic capabilities, scholars suggest that antecedents to innovation can be found at the individual level within organizations (Rothaermel & Hess, 2003).
A key reason behind the international expansion is to gain access to knowledge in the foreign market and to transfer to other parts of the firm (Yiu, et al., 2007). According to
Subramaniam and Youndt (2005, p.451), the definition of intellectual capital is “the sum of all knowledge the firm utilizes for the competitive advantage”. Clearly, pure transmission of knowledge is not enough; the key element is to utilize this new knowledge in the operations (Bresman, Birkinshaw, and Nobel, 2010, Minbaeva, Pedersen, Bjorkamn, Fey, and Park, 2003, Zahra & George, 2002). The ability to create and transfer knowledge internally is now one of the main competitive advantages of the multinational corporations (Minbaeva et al., 2003). The human capital refers to skilled employees with their own roles and functional expertise, who constitutes the main source of new ideas and knowledge within the organization (Subramaniam & Youndt, 2005). The essence of innovation is about identifying and using the opportunity to create new products (Van de Ven, 1986). Not surprisingly, the process of innovation is usually the same as continuing to pursue the use of new and unique knowledge (Nonaka & Takeuchi, 1995). Because of the knowledge asymmetry that exists between institutions, knowledge is a crucial condition that helps companies achieve innovative ability (Hargadon & Sutton, 1997). The previous study defines human capital as “the knowledge, skills, and abilities residing with and utilized by individuals” (Subramaniam & Youndt, 2005, p.451). Individuals and their associated human capital are critical to increasing the technical boundaries of the company to absorb and deploy knowledge domains (Hill & Rothaermel, 2003). Therefore, we expect human capital to enhance the transformation of existing knowledge, and thereby affect the firm's radical innovation (Subramaniam & Youndt, 2005).
3. Theoretical Framework
In the literature review, we identified the trend of the emerging economy uses innovation as the strategy to catch-up in the international competition. Moreover, we conclude that constraints in the domestic market will fuel emerging multinational enterprises expand to the international market. In this study, we split international expansion as two approaches, export and foreign direct investment (FDI), and test the different effect on these two entry modes. In the theoretical framework, the international diversity added as a moderator, since there is contradict arguments in this field. According to resource-based theory and dynamic capabilities, we argue that intellectual human resource in the organization would facilitate innovation performance. Under the theoretical background and the links between the different variables, we first analyze the difference by adopting different entry modes when taking firm’s innovation performance as the dependent variable. It will be followed by an examination of the moderating effect of internationalization diversity and educated human resources on this relationship. The theoretical framework is showing in the following graph: Figure 1. Theoretical Framework
International Expansion: FDI & Export
International Diversity Educated Human Resources Innovation Performance
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3.1. International Expansion and Innovation Performance
Enterprises that located in different geographic locations, when operating in international markets, face incremental global competition that may accelerate search methods to gain and sustain their competitive advantage (Barkema & Vermeulen, 1998; Ghoshal, 1987). It is an emerging trend that companies with diversified geographical operation would be more likely to invest in their product differentiation (Geringer et al., 2000) as large business scope meaning that companies need to satisfy diverse preferences. Technology has been found as a determinant of global market integration, companies must enter international market to support R&D expenditures and to obtain the technology to compete (Kobrin, 1991). As for multinational enterprises operating in the foreign environment, to be successful, the innovative capability is one of the critical competitive advantages firms need to have.
In the context of internationalization, companies need external knowledge to supplement existing knowledge and capacity until they have accumulated enough international experience. The internationalization shifts into a larger source of external knowledge, so that firms can compete in the international market (Shearmur et al., 2015). On the other hand, international expansion could give firm chances to leverage resources from the cross-border integration of markets, hence, reach economies of scale and scope to rapidly acquire innovation revenue (Kobrin, 1991). Multinational enterprises can increase their ability to innovate by using differentiated resources in a broader market base, which is often difficult to achieve in the domestic market (Kotabe, 1990). Moreover, these companies can facilitate
innovation using the advantages of different countries, such as local resource endowments (Kim et al., 1993), through partnerships with local suppliers, R&D centers and competitors (Hitt, Hoskisson, and Kim, 1997). Kotabe, Srinivasan, and Aulakh (2002) point out that internationalization can reduce the cost of innovation, and highly internationalized enterprises will enter multiple markets, accordingly can purchase raw materials and R&D investment at the lowest price, and set up R&D centers in the highest productive areas.
By leveraging the four characteristics of the resources and capabilities to improve the competitive advantage of enterprises that is based on the resource-based view (Barney, 1991), the central issues of business are the entry mode selection. According to the internationalization theory, the process of internationalization of enterprises is a gradual evolutionary process (Johanson and Vahlne, 1977). Nevertheless, many companies have skipped certain stages, jumped into the direct implementation of highly controlled international models such as mergers and acquisitions and greenfield investments, which require enterprises to interact with multiple international market stakeholders (Dodgson, 1991). Compare to export, the high-control entry mode may increase the breadth, depth, and speed of technical learning (Zahra et al., 2000), therefore, higher possibility for firms to be innovative. As discussed earlier, the emerging market enterprises often enter foreign countries for knowledge seeking. The benefits and risks of international business transactions are different. By using different entry mode will give multinational enterprises different access to learning opportunities (Ghoshal, 1987). Tacit knowledge is the cornerstone of the dynamic capabilities used to build competitive advantage (Teece et al., 1997). The
high-control entry mode creates the potential for higher strength success and failure. Thus, the use of highly controlled entry mode facilitates in-depth technical learning. High-control entry modes like FDI usually needs to be close to the market and customers (Zahra et al., 2000), thereby increasing the exposure of different sources of information. For example, interaction with affiliate partners provides important insights into the research progress of other companies and the commercial products being developed. Compare to high-control entry mode like foreign direct investment, some low-control transactions (such as exporting) have limited interactions with marketers, suppliers, and buyers (Zahra et al., 2000). Since some companies lack certain knowledge base and capabilities operating in relatively in the high sophisticated market, they would choose to partner with established global competitors could help them to gain knowledge-based capabilities (Kedia, Gaffney and Clampit, 2012). However, it is difficult for export companies to interact with suppliers and customers in foreign markets, and there is also limited dynamic understanding of foreign technology and market development (Zahra et al., 2000). Therefore, those arguments lead to the hypothesis that:
H1: OFDI will have the stronger influence on innovation performance of emerging multinational enterprises than export.
3.2. The Moderating Role of International Diversity
Expanding to new markets presents opportunities to sell the innovative product in the external marketspace. The more countries the firm enter, the broader market scope that
company operates to leverage its skills and product (Kim et al., 1993), thus the growth and profitability would also increase (Geringer, Beamish, and daCosta, 1989). Broad international market coverage also stabilizes the company's financial performance (Zahra et al., 2000) and increases the chances to survive (Hitt, Hoskisson, and Ireland, 1994). International expansion links the company to important constituencies in different markets to enable it to access key economic resources (Zahra et al., 2000). The sharing and coordination of resources between business units and geographic regions contributed to the use of common core competencies and will lead to economies scope or synergy (Ramirez-Aleson & Espitia-Escuer, 2001). Furthermore, cross-country market integration provides enterprises with greater opportunities to achieve economies of scale through standardized products, rationalization of production and coordination of key resource functions (Hitt et al., 1997). As a result, businesses can improve efficiency, learning, and innovation. As Kim, Hwang, and Burgers (1993) point out, internationalization provides companies with the opportunity to learn and develop their abilities.
International diversity enables new businesses to enter profitable networks and profit (Hitt & Bartkus, 1997). The network also provides marketing, technical, cultural and competitive information to increase the chances of survival (Hitt et al., 1994). Although Hitt, Hoskisson, and Kim (1997) found that international diversity could lead to the decreasing firm’s performance, it is unlikely that emerging firms will increase their international diversity to the extent of declining returns. Companies that are expanding in the international market are more likely to experience cultures and institutional environment that are different
from the domestic country (Hofstede, 1980). International diversity contributes to facilitating the involvement of manufacturers and other technology providers in the established networks, thereby increasing technical learning. With the geographical dispersion of the countries that serve the business, the breadth of its technical learning is expected to increase (Zahra et al., 2000). International diversity helps companies accumulate general and default technical knowledge ((Lei, Hitt, and Bettis, 1996). Regional differences also emphasized on the importance of corporate social learning (Sohn, 1994). This learning stems from the understanding of the design and marketing of the company's products and processes and the use of cultural values (Zahra et al., 2000). As the enterprise enters the distant market, its learning ability will be expanded accordingly (Teece, Rumelt, Dosi, and Winter, 1994). Hence, those arguments lead to:
H2a: International diversity will have a positive moderating effect on the relationship between export and innovation performance.
H2b: International diversity will have a positive moderating effect on the relationship between OFDI and innovation performance.
3.3. The Moderating Role of Educated Human Resources
It is widely known that the innovative capability of the company is closely related to the intellectual capital or the ability to use knowledge resources within the organization (Subramaniam & Youndt, 2005). Although the enterprise gets access to enormous resources and information through the internationalization, companies need to integrate internal
resources, adjust the organizational structure to use these resources and information (Hill & Rothaermel, 2003). According to the resource-based view, the external knowledge flow as an assistance to strategic decision-making at the firm level has been documented by several scholars, who illuminated the importance of the internal capabilities of the firm (Teece et al., 1997). The human capital in the company is more likely to be exposed or get access to the diverse knowledge pool in the outside market (Subramaniam & Youndt, 2005). Today, companies use the technical knowledge and capabilities of R&D providers to support their internal innovation activities.
Intellectual capital is critical for a company to build competitive advantages (Subramaniam & Youndt, 2005). Creativity is about new ideas, and innovation is the adoption of it. One of the characteristics of innovative or successful entrepreneurs is having a high level of knowledge (Heunks, 1998). Prior research finds that locally embedded knowledge and skills among intellectual human capital may be a unique source of innovative competence for the firm (Rothaermel & Hess, 2007). Through the realization of internal capacity, the high-skilled labor force would make enterprises more selective in outsourcing. Therefore, the higher education of human resources is an important part of the company's resources bundle (Spithoven & Teirlinck 2015).
Ghoshal (1987) argues that global diversity is not directly related to better capacity, it only provides the learning potential for enterprises. Since the nature of the innovation capability is complex and ambiguous, making it difficult to replicate (Dierickx & Cool, 1989). The organization should have a clear goal and create mechanisms and systems for it, in order
to take advantage of this potential. Cohen and Levinthal (1990) argue that the firm's innovation is highly dependent on its absorptive capability, which it the ability to identify the value of information outside of the organization and apply it to the business purpose. And the absorptive capacity constructs in the organization-level, which means that it resides with employees of the company (Minbaeva et al., 2003). Zahra and George (2002) summarized representative studies and identify the absorptive ability with four key dimensions, which are: acquisition, assimilation, transformation, and exploitation. One of the elements of absorptive capacity is the prior knowledge base of the enterprise, thus the educational background of employees may be the ‘prior knowledge’ that company could use and assimilate (Cohen & Levinthal, 1990, Minbaeva et al., 2003), and be able to facilitate its innovative ability. Highly educated employees are the core competencies of enterprises, they are most likely to try and apply new knowledge, transform existing knowledge into a wide range of knowledge areas for product and service innovation (Tushman & Anderson, 1986). The educated workforce, who can produce knowledge spillover or technology-driven effect, has an important role for enterprise innovation activities. The above arguments lead to following hypotheses:
H3a: Educated human resources would have a positive effect on the relationship between export and innovation performance.
H3b: Educated human resources would have a positive effect on the relationship between OFDI and innovation performance.
4. Methodology
In this research, a panel dataset design to be used in testing the relationship between the international expansion and innovation performance, align with international diversity and educated human resources as the moderator. We used the OLS regression analysis to test the hypotheses from the theoretical framework. The discussion of empirical results is based on the correlation and regression analyses amongst the different variables.
4.1. Sample and Data Collection
The sample of this study consists of Chinese high-tech multinational enterprises, over the period 2011-2015. The selection of Chinese high-tech firm as the data sample for the hypothesis testing is based on the reasons that: firstly, Chinese multinational firms were exploring foreign market actively during the study period (Wu et al., 2016). It would give the chance to highlight the relationship of international activities and the innovation performance. Secondly, as a result of the rapid growth in the market, China has become a model for most emerging economies on how to deal with economic reform and modernization (Yiu, et al., 2007). Therefore, this allows generalizing findings of this paper to other emerging markets, gaining insights into the influence on other emerging countries if they follow the path of China. Finally, over the last decade, China experienced the market transformation and more freedom was given to the individual firms (Guan & Yam, 2015). With the support of the government incentives and favorable policies, high-tech companies in China are more actively to build on innovative outcomes.
The research data was collected mainly from three sources. First, the general information of Chinese firms was from National Bureau of Statistics of China. Collecting data through this dataset is the most concrete and authoritative way of gathering information for the Chinese market. Secondly, the number of graduates in higher education per year was obtained from the Ministry of Education of the People’s Republic of China. The data also collected through the China Statistics Yearbook on High Technology Industry. This dataset contains the data of production and operation, R&D investment and relevant activities in China’s high-tech industry from 2011 to 2015. The yearbook comprehensively described the basic situation in high-tech industry of China. This is the main source for publics to understand the development of the Chinese market.
Table 1. Overview dataset
Variable Observations Mean Std. Dev. Min Max
Patents 155 4895.671 14776.82 0 125471
Export 155 1537.259 3454.225 0 17149.47
FDI 155 97.23066 170.3385 0.0012625 1443.922
International diversity 155 32.52903 22.27902 1 97
Educated human resources 155 0.0532737 0.0302008 0.0073003 0.1933724
Government fund 155 52762.27 70048.62 0 332730.3
GDP growth rate 155 109.9814 2.375495 103 116.4
Product investment 155 783501.3 1571298 37.9 10700000
4.2. Variables
In this section, the description of different variables is given, and further addressed the measurement of each variables.
4.2.1. Dependent Variable
The dependent variable is the innovation performance that is calculated by on the number of patents granted to the company during the sample. Patents are the measure of innovation commonly used in the literature because they represent an external measure of technological innovation and are economically significant (Liu, Lu, Filatotchev, Buck, and Wright, 2010). In this approach by collecting patents every year would be effective to capture the "flow" rather than the stock of patents, which means excluding the patent generated before the company's international activities (Wu et al., 2016). Patent data has seen as an accurately way of capturing the intellectual property of the company, and it has been widely used to measure the innovation performance (Salomon & Jin, 2010, Adegbesan & Higgins, 2010).
4.2.2. Independent Variables
The key independent variable for this study is the international expansion, which concluded two entry modes (export and FDI). In accordance with Lu and Beamish (2001), Buckley et al. (2007) the measurement for different international modes. This paper used the global outward foreign direct investment flows during the sample period to measure outward foreign direct investment for a company. By using the export intensity as the indicator to measure the
export situation, which will be calculated as exports accounted for total sales revenue proportion (Lu & Beamish, 2001).
4.2.3. Moderating Variables
There are two moderating variables in this research paper, which could have the impact on the relationship between independent and dependent variable, are international diversity and the educated human resources. The international diversity is measured by the number of countries the companies entered for the international operation (Sambharya, 1995, Zahra et al., 2000, Tallman & Li, 1996).
According to the relevant research on the definition of human capital investment, this study from the human capital of the general aspect of measurement. General human capital generally refers to the average level of education of employees, according to Pennings, Lee and Van Witteloostuijn (1998), the proportion of employees with the college degree or above has been applied as the sample of educated human capital. In this study, the level of educated employees was measured at the regional base, which was used the proportion of graduates in higher education for each province.
4.2.4. Control Variables
In this study, there are also several control variables included. These variables are which could also have the impact on the innovation performance, and may lead to a biased result if not taken into account.
(1) First, we controlled for regional size which is measured by the number of firms in the high-tech industry within each region. The previous studies suggested that the market size is correlated to the number of firms in the market (Asplund & Sandin, 1999), and the market size was one of the factors determine the innovation output (Desmet & Parente, 2010).
(2) This study also controlled for the government fund. Since the research is based on the regional level of the Chinese market, some provinces or municipalities would have more government support than other regions. Therefore, it is necessary to control this variable to reduce the impact of the regional differences on the relationship between independent and dependent variables.
(3) The investment made by each region on the R&D department is another control variable that has been selected in this study. In this study, since the dependent variable is measured by the number of patents firms owned. The investment of developing new products or services was used.
(4) The GDP growth rate has been used as the last control variable in the research paper. It is the variable in terms of growth potential and size of the city (Ning, Wang, and Li, 2016), which could have the feedback effect and promoting impact on innovation activities (Galindo & Mendez, 2014).
4.3 Empirical Models
The main framework of this research is the impact of international expansion on the innovation performance of enterprises, in addition to this, the moderating role of
internationalization and educated human resources is also added. The OLS regression model are used to test the proposed hypotheses.
The empirical model is as follows:
𝐼𝑃𝑖,𝑡 = 𝛽1𝐼𝐸𝑖,𝑡+ 𝛽2𝐹𝐼𝑅𝑀𝑆𝑖,𝑡+ 𝛽3𝐺𝑂𝑉𝐹𝑈𝑁𝐷𝑖,𝑡+ 𝛽4𝐼𝑁𝑉𝐸𝑆𝑇𝑖,𝑡+ 𝛽5𝐺𝑅𝑂𝑊𝑇𝐻𝑖,𝑡+ 𝜀𝑖,𝑡
(H1)
In this model, we are testing the first hypothesis that is the effect of international expansion on the innovation performance. Among the equation, IP represents the innovation performance, followed by the subscripts i and t, which stand for the region and the year respectively. The IE stands for international expansion, which contains export and FDI separately. The rest of the equation contains four control variables (number of firms, government fund, investment, and GDP growth), and the standard error 𝜀.
𝐼𝑃𝑖,𝑡 = 𝛽1𝐼𝐸𝑖,𝑡+ 𝛽2𝐹𝐼𝑅𝑀𝑆𝑖,𝑡+ 𝛽3𝐺𝑂𝑉𝐹𝑈𝑁𝐷𝑖,𝑡+ 𝛽4𝐼𝑁𝑉𝐸𝑆𝑇𝑖,𝑡+ 𝛽5𝐺𝑅𝑂𝑊𝑇𝐻𝑖,𝑡+ 𝛽6𝐼𝐸𝑖,𝑡∗ 𝐼𝐷𝑖,𝑡+ 𝜀𝑖,𝑡 (H2) 𝐼𝑃𝑖,𝑡 = 𝛽1𝐼𝐸𝑖,𝑡+ 𝛽2𝐹𝐼𝑅𝑀𝑆𝑖,𝑡+ 𝛽3𝐺𝑂𝑉𝐹𝑈𝑁𝐷𝑖,𝑡+ 𝛽4𝐼𝑁𝑉𝐸𝑆𝑇𝑖,𝑡+ 𝛽5𝐺𝑅𝑂𝑊𝑇𝐻𝑖,𝑡+ 𝛽6𝐼𝐸𝑖,𝑡∗ 𝐻𝑅𝑖,𝑡+ 𝜀𝑖,𝑡 (H3)
The following two equations are testing the effect of moderating variables, the equations are similar to the first one, except for the two moderators mentioned in the model that are ID (international diversity) and HR (educated human resources).
In the next section, there contain 6 steps to test the hypotheses, the model 1 and 2 are used to test the first hypothesis, and the rest of the models test the moderating effect of variables in hypothesis 3 and 4.
5. Analyses and Results
In this chapter, the results from the statistical analyses of the hypotheses will be presented. The first part of the analysis presents a bivariate analysis, whereas the second part of this chapter contains the analysis and evaluation of the regression analysis. The details from the data used in this study are presented in Table 1. The data consists of 31 regions in China, with data from the year 2011 to 2015. This means there are 155 observations has been used in this analysis.
5.1. Correlation testing
Before conducting the regression analysis, it is important to test the correlations between the variables to reduce the possibility of getting biased results. In the table below, the Pearson’s correlation coefficients retrieved from the SPSS analysis are presented. Since the data sample of the study only contains 155 observations, which leads to the relatively significant correlations between the independent and control variables.
Table 2. Correlation testing Mean Standard Deviation 1 2 3 4 5 6 7 8 1. Export 1537.259 3454.225 1 0.545** 0.548** -0.048 -0.167* 0.448** 0.754** 0.542** 2. FDI 97.231 170.339 1 0.640** 0.108 -0.328** 0.537** 0.418** 0.488** 3. International diversity 32.530 22.279 1 0.160* -0.418** 0.500** 0.680** 0.779** 4. Educated human resource 0.053 0.030 1 -0.029 0.252** 0.064 0.333** 5. GDP growth rate 109.981 2.376 1 -0.306** -0.170* -0.279** 6. Government fund 52763.272 70048.616 1 0.257** 0.608** 7. Number of firms 231 462.405 1 0.516** 8. Investment 12.101 2.149 1
**. Correlation is significant at the 0.01 level (2-tailed). *. Correlation is significant at the 0.05 level (2-tailed).
The results of correlation testing have shown that the investment is highly correlated with the international diversity. Since more countries the company entered, the more product would produce for the target markets, this will lead to higher investment in the product development. On the other hand, the correlation between export and number of firms is also high. It is also worth to mention that the GDP growth is negatively correlated with the international expansion, according to the previous discussion, firms from emerging economies entering the foreign market for exploiting differences across countries to enhance and increase firm’s ability (Ramirez-Aleson & Espitia-Escuer, 2001, Ramamurti, 2012), in other words, taking international expansion as the ‘spring-board’ approach for acquiring advanced technologies and know-how (Luo & Tung, 2007). When the GDP growth rate is high, which means that the region does not need the exploiting strategy to increase financial performance so that the international expansion would decrease.
5.2. Regression Analyses
The dataset we are using for the research is the panel data so that the Stata will be used to test the regression model and moderating effect of the variables. The regression concluded for investigating the relationships between the international expansion and firm’s innovation performance, as well as the moderating role of international diversity and educated human resources. The table following provides an overview of the result of the regression analysis. Table 3. Overview results
Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Independent
Variable
Export 4.332*** -1.223 -3.353***
FDI 30.647*** 39.425 58.531***
Moderator International diversity 0.098*** -0.125
Educated human resources 159.403*** -486.534 Control variables Government fund 0.023 0.050** 0.013 0.050** 0.012 0.049** GDP growth rate -304.793 270.228 -237.490 269.101 -231.710 215.942 Number of firms -9.542*** 9.266*** -22.790*** 9.608*** -7.552*** 8.928*** Investment -214.464 -76.895 653.890 -101.533 -562.059 17.424 Model fit F 85.14 24.12 93.16 20.01 133.64 20.89 R2 0.741 0.447 0.791 0.448 0.844 0.459 Adj. R2 0.732 0.429 0.782 0.426 0.838 0.437 p-value 0.0000*** 0.0000*** 0.0000*** 0.0000*** 0.0000*** 0.0000*** *p<0,05 **p<0,01 ***p<0,001 5.2.1. Direct Effects
In the first section, the first hypothesis will be tested, which is the direct effect of the independent variables (internationalization entry mode) on the dependent variable (patents). The results of the hypothesis are presented in the Table 3.
The first model in Table 3 tests the effect of export on innovation performance. This model is statistically significant F(5, 149) = 85.14; p<0.001, and explains 73.2% of variance in the innovation performance. The next model tests the effect of FDI on innovation performance, which is also significant F(5,149) = 24.12, p<0.001. The results show that both entry modes have positive effect on the firm’s innovation performance, but FDI (β = 30.65, p<0.001) would have a higher impact than export (β = 4.33, p<0.001). In other words, if the export increase for one, the innovation performance will increase for 4.33. Whereas the one unit FDI increment will add 30.65 on the innovation performance. In first two models, some of the control variables also show significant positive and negative effect in the analysis, for instance the number of firms (β= 9.27, p<0.001) and government fund (β = 0.05, p<0.001) would have the positive effect on the dependent variable. This finding of the empirical study is in line with the research of Zahra et al. (2000).
5.2.2. Moderating Effects
In Hypotheses 2 and 3, we proposed that internationalization diversity and educated human resources moderate the direct effects of international expansion on the firm’s innovation performance. The following four models are testing the moderation hypotheses. The regression is similar to the tests above, with the addition of the moderation effect.
Specifically, we argued that international diversity enhances the effect of international expansion on the dependent variable. We first test the moderating role of internationalization diversity on export and innovation performance, the Model 3 shows that Hypothesis 2a is
supported since the interaction with geographic diversity and export has a positive and significant effect on innovation performance (β = 0.098, p < 0.001). On the other hand, when analyzing the effect of international diversity on OFDI and dependent variable, the results of Model 4 are not supporting the Hypothesis 2b, as the coefficient of the interaction between internationalization diversity and FDI does not have a statistically significant influence on innovation output (β = -0.125, p > 0.05). But it is interesting to note that, before adding the international diversity as the moderator, the effect of FDI on innovation performance (β = 39.43) was higher than the Model 2 (β = 30.65).
The findings of Model 5 are supportive of the moderating role of educated human resources on the direct effect through export to innovation performance as proposed in Hypotheses 3a. The result indicates the significant and positive effect of the moderator (β =159.4, p < 0.001), The empirical results in Model 6 indicate that Hypothesis 3b is rejected since the interaction between educated human resources and FDI does not significantly affect the innovation performance (β = -486.5, p > 0.05). After adding the moderator to the regression model, the effect of control variable (government fund, number of firms) does not change much, the significance level stays the same.
In conclusion, the results of the regression analysis partly support the hypotheses developed in this thesis. The degree of direct effect by export and OFDI has been tested, and the hypothesis that the OFDI would have the stronger influence than export has been supported by the results. Even more, the regression analyses also partially support the assumption of the moderator role of internationalization diversity. The degree of
internationalization positively moderates the effect of export on innovation performance. On the other hand, the effect of OFDI on innovation performance is not moderated by internationalization diversity. The educated human resources as another moderator in this study also showed positive moderates the effect of export on innovation performance. But the regression result was not supported for the moderation effect of educated human resources on the relationship of OFDI and innovation performance.
6. Discussion
Through the discussion of the last five chapters, this paper has made a systematic and in-depth analysis of the relationship between international expansion, the degree of internationalization, intellectual human resource and innovation performance. This chapter will summarize the contents of the previous study, elaborate the main conclusions of this paper, the theoretical contribution and practical significance of this study, at the same time to explain the limitations and shortcomings of this study, and pointed out the future direction of further research.
6.1. Findings
In the context of open innovation, emerging multinational enterprises are seen internationalization as an imperative approach to growing. By way of an important resource acquisition and learning channel, internationalization has become an important strategy for enterprises, which is of strategic significance to enhance the innovation ability of enterprises.
In this paper, companies from high-tech industry in China was used as a sample, tested the influence of international expansion and entry mode on the innovation performance of enterprises. Based on the resource-based view and the theory of dynamic and absorption ability of enterprises to test the moderating effect of highly educated human resources and international diversity on the relationship between internationalization and innovation performance. Through the analysis and demonstration of this paper, the following main findings are formed:
Conclusion 1: International expansion has a positive impact on firm’s innovation performance.
While competitive pressures in the international market enable enterprises to accelerate the innovation process (Elango & Pattnaik, 2011). Internationalization could provide an opportunity for enterprises to learn, a possibility to allocate resources around the world, and therefore improves the innovation of enterprises (Kim et al., 1993, Tallman & Li, 1996, Zahra et al., 2000). Therefore, the internationalization can positively affect the innovation performance of enterprises. In this study, through the analysis and empirical testing of high-tech enterprises in the Chinese market, the results supported the hypothesis that the internationalization positively influences the firm’s innovation outcome. International expansion of firms has a significant positive impact on the innovation performance, which is consistent with the findings of Hitt et al. (1997). Compare to the internationalization of companies in developed countries, the international expansion of enterprises in emerging economies such as China, the main purpose is not the assets exploitation, but the acquiring
resources and opportunities for innovation through access to international markets (Luo and Tung, 2007). Therefore, it has a theoretical fit in the testing of the relationship between international expansion and innovation performance by using Chinese enterprises as the sample. In addition to that, different internationalization entry modes (export and foreign direct investment) have a significant positive impact on innovation performance, as consistency with findings of Salomon and Shaver (2005). Through export and foreign direct investment, enterprises can not only allocate resources in the global scope but also made the opportunity to learn from foreign enterprises (Kobrin, 1991, Kotabe, 1990, Kim et al., 1993). However, the study also found that, compared to exports, foreign direct investment to corporate innovation performance to promote greater role; because through foreign direct investment in local enterprises and foreign markets can be more in-depth interaction (Zahra et al., 2000), enterprises can get more advanced technology and knowledge, and thus more able to promote the firm’s innovation performance.
Conclusion 2: The relationship between internationalization and innovation performance is moderated by the ability of enterprises to absorb knowledge.
Internationalization brings a wealth of knowledge and information to the enterprise and enhances the company's sense of innovation. For companies, it is more important that how to quickly integrate external resources and transfer it within the organization to the efficient use of knowledge (Teece, 2007). The internationalization strategy only provides an opportunity for enterprises to learn and access to foreign knowledge, but enterprises attempt to promote innovation through the international business must depend on the business of foreign
marketing and technical knowledge of the digestion and absorption capacity (Ghoshal, 1987, Bresman, Birkinshaw, and Nobel, 2010, Minbaeva et al., 2003). According to the dynamic capacity, which is the extended theory of traditional resource-based view (Teece et al., 1997). The resource-based theory states that the internationalization of enterprises to provide the necessary resources for innovation (Hitt et al., 1997), and the internationalization of enterprises to provide the necessary learning opportunities for innovation (Zahra et al., 2000), and can enhance the innovation performance of enterprises accordingly. However, these two theories do not explain the conversion process of resources and knowledge to corporate innovation performance. Our findings in line with the study of Subramaniam and Youndt (2005). The empirical result of the paper suggests that the enterprises enter the international market is not only getting the resources and knowledge needed to innovation; more importantly, companies need to take advantage of internal resources (human capital) to enhance their ability to identify and use the external information.
6.2. Academic Relevance and Managerial Implications
All in all, these findings have three important implications, which could provide useful and specific guidelines for managerial practices. This paper explores international expansion as an innovative catch-up strategy influences on the innovation performance of enterprises and studies the impact of internationalization entry mode on the innovation performance of enterprises. Also, the research contains the effect of the international diversity and educated human resources on the relationship between internationalization and firm’s innovation
