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When does knowledge similarity help foreign firms improve performance?

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Abstract

This paper investigates whether knowledge similarity improves the performance of foreign firms and, if so, when. Using panel data on foreign and local firms in China for the years 1998–2007, we empirically find a positive relationship between knowledge similarity and the performance of foreign firms. We find two moderating factors for the relationship, namely foreign ownership share, a firm-level factor that positively moderates the relationship, and market-oriented institution, a province-level factor that negatively moderates the relationship. Our findings identify the detailed theoretical mechanism for the effects of knowledge similarity on the performance of foreign firms under different moderating conditions.

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Notes

  1. We further clarify the R2 of each model as there appears to be identical R2 up to three decimal places in Table 2. This is due to the conservative methodology of fixed effects regression plus the option of clustering, which makes R2 remain almost unchanged through rounding. In fact, there is some change for R2 below four decimal places and if we eliminate the option of clustering in the fixed effects model, there will be more apparent changes in R2 across the models.

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  1. Korea University Business School, Korea University, 145 Anam-ro, Seongbuk-gu, Seoul, 02841, Republic of Korea

    Xuelian Piao & Jon Jungbien Moon

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  1. Xuelian Piao
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Correspondence to Jon Jungbien Moon.

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Piao, X., Moon, J.J. When does knowledge similarity help foreign firms improve performance?. Asian Bus Manage 18, 301–323 (2019). https://doi.org/10.1057/s41291-018-0048-4

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