Better at Home, Abroad, Or Both? How Chinese Firms use Ambidextrous Internationalization Strategies to Drive Innovation

Abstract

Purpose

Existing research emphasized that Chinese firms gain experience and improve innovation capability through interaction with competitors at home (i.e., inside-out internationalization) and abroad (i.e., outside-in internationalization). However, how Chinese firms transform these experiences into different types of innovation (product vs. process) is largely unknown. The present study (1) analyzes how different internationalization trajectories lead to different types of innovation, (2) establishes how Chinese firms use ambidextrous strategies to combine inside-out and outside-in internationalization, and 3) provides empirical evidence of how ambidextrous strategies might influence performance.

Design/methodology/approach

This study uses (1) a case research method to refine the classification of firms’ internationalization strategy types, (2) a qualitative textual analysis of firms’ annual reports to differentiate between product and process innovation and to estimate these firms’ international performance, and (3) an inductive approach to derive testable propositions from the literature review and empirical cases.

Findings

This study provides evidence that many Chinese firms follow an inside-out approach to internationalization and primarily focus on process innovation. At the same time, those firms that implement ambidextrous internationalization strategies develop both product and process innovations and appear to exhibit higher performance.

Research limitations/implications

This study’s focus on understanding what drives different types of innovation of Chinese firms is important as these firms often struggle to accomplish the dual tasks of competing both at home and abroad with innovation-driven domestic and foreign rivals. Applying an ambidexterity perspective to the context of internationalization strategy makes it possible to reconcile the need to simultaneously implement both outside-in and inside-out strategies and to achieve higher performance results. Further empirical research is required to confirm and generalize this study’s findings.

Practical implications

Managers are advised to assess which internationalization path would be optimal under a given set of conditions. Further, they should balance their internationalization strategies with respect to innovation types. Foreign multinationals may learn from Chinese firms how to develop ambidextrous internationalization strategies.

Originality/value

This study applies the ambidexterity lens and differentiates between product and process innovation to explore how different types of internationalization strategies affect product vs. process innovation, as well as firm performance. The empirical evidence provided in this paper is based on original data from 30 Chinese companies and two in-depth case studies. This study provides novel insights into how different trajectories could be combined through ambidextrous strategies.

Citation

Prange, C. and Bruyaka, O. (2016), "Better at Home, Abroad, Or Both? How Chinese Firms use Ambidextrous Internationalization Strategies to Drive Innovation", Cross Cultural & Strategic Management, Vol. 23 No. 2. https://doi.org/10.1108/CCSM-07-2014-0079