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How “Belt and Road” initiative implementation has influenced R&D outcomes of Chinese enterprises: asset‐exploitation or knowledge transfer?
Author(s) -
Li Sirui,
Su Jing,
Liu Ying,
Lepech Michael D.,
Wang Jie
Publication year - 2021
Publication title -
randd management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.253
H-Index - 102
eISSN - 1467-9310
pISSN - 0033-6807
DOI - 10.1111/radm.12445
Subject(s) - counterfactual thinking , construct (python library) , propensity score matching , asset (computer security) , promotion (chess) , business , sample (material) , monetary economics , economics , political science , chemistry , philosophy , statistics , mathematics , computer security , epistemology , chromatography , politics , computer science , law , programming language
As an Outward Foreign Direct Investment (OFDI) promotion policy which aims to transform and upgrade Chinese firms, the ‘Belt and Road’ (B&R) Initiative has been widely discussed with regard to its influence on R&D activities. Many studies have associated this topic with the relationship between OFDI and R&D activities, however, the difference between the OFDI promotion policy and the OFDI has been neglected, resulting in little understanding of the effects of B&R implementation on R&D activities related to established OFDIs. By analyzing how the implementation of B&R affects asset‐exploitation and knowledge transfer, this paper provides a new perspective to help understand if and how Chinese firms that have affiliates in B&R countries gain positive R&D outcomes from such a policy. This study examines a sample of Chinese‐listed manufacturing firms from 2013 to 2017. Propensity Score Matching is used to construct a counterfactual framework and control for confounding problems from new OFDI entries. Difference‐in‐Differences is used to infer the policy effect of B&R implementation on R&D outcome of Chinese firms that have affiliates in B&R countries. Results show a continuously positive effect on R&D outcomes mediated by the increase in R&D expenditure, along with a directly weak‐positive effect on R&D outcomes in the short‐run. The continuously positive effect may be viewed as a result of an improvement in asset‐exploitation, while the directly weak‐positive effect is more a result of an increase in knowledge transfer, leaving out technology transfer. Regarding differences among Chinese firms that invest in B&R countries with varying levels of economic development, this study also found no differences between firms that have B&R affiliates in developed versus developing countries. This finding implies that Chinese firms have experienced little or no increase in technology transfer through B&R implementation. Overall, these findings, to some extent, illustrate Chinese firms’ behavior patterns in R&D management related to established OFDIs in light of OFDI promotion policies and help policy makers assess and understand the effects of the B&R implementation more deeply.