Unraveling the relationship between innovation performance feedback and outward FDI: Moderating influence of inward FDI spillovers

Abstract

This study examines the impact of innovation performance feedback on the outward foreign direct investment (FDI) of emerging market firms by differentiating between innovation quantity and innovation quality. It also explores the moderating role of inward FDI spillovers in local industrial environments. Using a zero-inflated negative binomial model, the findings show that: (1) the further a firm is below or above its innovation performance aspirations, the less outward FDI it will take; (2) inward FDI spillovers will strengthen the relationship between positive innovation quantity feedback and outward FDI while weakening the relationship of negative innovation quantity feedback; and (3) inward FDI spillovers will weaken the relationship between innovation quality feedback (both negative and positive) and outward FDI.