Feedback from Subsidiaries : The Impact of Motivational Diversification of Outward Foreign Direct Investment on Innovation Performance of the Parent Company

The effect of Outward Foreign Direct Investment (OFDI) on multinational enterprises’ innovation in emerging economies remains controversial. From the perspective of motivational diversification, this study examines the impact of OFDI on a parent company’s innovation performance, using the Chinese Industrial Enterprise Database from 2000 to 2013. The results show that motivational diversification of OFDI positively promotes the parent company’s innovation performance. The breadth of OFDI plays a negative regulatory role, whereas the breadth of domestic investment positively moderates the impact. This study further deepens the research on the reverse spillover effect and provides some references for enterprises and governments to optimize the layout of investment at home and abroad, cultivating core competitive advantages