Institutional Distance, Organizational Learning, and Innovation Performance: Outward Foreign Direct Investment by Chinese Multinational Enterprises

Changjun Yi, Xueyu Xu, Chusheng Chen, Yenchun Jim Wu

Research output: Contribution to journalArticle


Institutional distance is the difference in institutional environments between a multinational company’s host country and its home country. This article explores the effects of formal and informal institutional distance (IID) on the innovation performance of Chinese multinationals with outward foreign direct investment (OFDI), as well as the moderating role of organizational learning in the relationship. The results suggested that a formal institutional distance (FID) paradox existed between the FID and OFDI firms’ innovation performance; the informal institutional distance inhibited the technology transfer from foreign subsidiaries to their parent companies and the growth of the parent companies’ innovation performance; exploratory learning can effectively attenuate the negative influence of IID on OFDI firms’ innovation performance.

Original languageEnglish
Pages (from-to)370-391
Number of pages22
JournalEmerging Markets Finance and Trade
Issue number2
Publication statusPublished - 2020 Jan 26
Externally publishedYes



  • innovation performance
  • institutional distance
  • OFDI
  • organizational learning

ASJC Scopus subject areas

  • Finance
  • Economics, Econometrics and Finance(all)

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