Abstract
Research has found that entrepreneur foreign-study experience can have either positive significant effects on firm innovation, or nonsignificant effects. The question, then, is when such experience benefits firm innovation, and when it does not. Adopting a resource-substitution perspective, we posit that the difference occurs because certain local resources can play a significant moderating role. Specifically, a private entrepreneur’s foreign-study-enabled human capital becomes less influential in driving firm innovation when the foreign-educated entrepreneurs participate strongly in the political system, or when the firm has a high level of guanxi––each of which enables the firm to achieve a local resource advantage over other firms, without the need for enhanced innovation. In contrast, foreign-study-enabled human capital becomes significantly influential in the context of high local marketization. We used the data from a series of nationwide surveys of privately owned firms in China to test these ideas. Regression results based on negative binomial regression models showed that returnee entrepreneurs’ participation in the political system, and firms’ guanxi, each substituted for the role of the returnee entrepreneurs’ foreign study experience in fostering firm innovation, thus rendering such experience no longer significant for firm innovation in the presence of strong political participation or guanxi. In contrast, entrepreneur foreign-study experience led to advantageous firm innovation in the context of higher local marketization.
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Notes
A recent report on Chinese students’ overseas study shows that the US, UK, Australia, and Canada are the top four countries that Chinese students went to for their foreign studies (25%, 19%, 14%, 10%, respectively). http://cdn.bigdatachina.vip/10/2019中国留学白皮书-新东方-2019.5-327页DVFDBFG.pdf
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We would like to thank Chuck Eesley and Haiyang Li for their constructive and helpful comments on earlier versions of the paper.
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Mao, K., Gong, Y. The contingent effect of private entrepreneur foreign-study experience on firm innovation in China. Asia Pac J Manag (2023). https://doi.org/10.1007/s10490-023-09904-6
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DOI: https://doi.org/10.1007/s10490-023-09904-6