The Impact of Host Country's Innovation Environment on the Performance of Overseas Subsidiaries from a Global Perspective

Zhaohui Zhang; Demei Xu

doi:10.6981/FEM.202509_6(9).0001

Authors

Zhaohui Zhang
Demei Xu

DOI:

https://doi.org/10.6981/FEM.202509_6(9).0001

Keywords:

Overseas Subsidiary Performance; Host Country Innovation Environment; System Quality; Regional Synergies.

Abstract

Based on more than 100,000 overseas subsidiaries, this paper explores the relationship between the innovation environment and the performance of overseas subsidiaries in the host country, and further discusses the moderating effect of institutional quality in the host country and the heterogeneity of different groups. The results show that the innovation environment of the host country has an inverted U-shaped relationship with the performance of overseas subsidiaries, which indicates that a moderate innovation environment promotes performance growth, while performance declines when the threshold is exceeded. The quality of the host country's institutions plays a positive role in regulating the scope of the innovation environment. The study also found that when the overseas subsidiary is on the same continent as the parent company, the inverted U-shaped relationship between the host country's innovation environment and the performance of the overseas subsidiary is more pronounced. This study enriches the theoretical framework and empirical evidence of the impact of the innovation environment on the performance of overseas subsidiaries in the host country, and provides theoretical basis and practical guidance for multinational enterprises to improve the performance of overseas subsidiaries.

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