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Do Management Innovations of Indigenous Firms Benefit from Managerial Spillovers from Multinational Enterprises?

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Abstract

Integrating research on foreign direct investment spillover and management innovation literature, this study develops and tests a spillover–management innovation–performance process model. The model posits that managerial spillovers, defined as the movement of managers from multinational enterprises to domestic firms, are indirectly related to the latter’s performance through management innovation, which serves as a conversion platform internalizing acquired knowledge for performance attainment. Moreover, we propose that the density of foreign direct investment and indigenous firms’ absorptive capacity moderate the spillover–innovation and innovation–performance relationships, respectively. Our findings support these propositions.

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Notes

  1. Initial measurement model tests showed that item 1 had a loading below 0.50. Following the recommendation by Jöreskog and Long (1993), it was dropped from further analysis.

  2. The initial run showed that item 4 had a loading below 0.50. As we did with the construct of management innovation, this item was dropped from further analysis.

  3. We acknowledge the two anonymous reviewers for their suggestions to use the SEM analysis..

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Funding

This study was funded by Research Grant Council of Hong Kong (China Grants RGC 9041833) and Summer Research Grants of Richard A. Chaifetz School of Business, St Louis University.

Author information

Authors and Affiliations

  1. Boeing Institute of International Business, Richard A. Chaifetz School of Business, Saint Louis University, St. Louis, USA

    Hongxin Zhao

  2. College of Business, City University of Hong Kong, Kowloon, Hong Kong

    Muammer Ozer & Reuben Mondejar

  3. School of Business Administration and Economics, State University of New York at Brockport, Brockport, USA

    Weidong Rong

Authors
  1. Hongxin Zhao
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  2. Muammer Ozer
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  3. Weidong Rong
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  4. Reuben Mondejar
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Correspondence to Hongxin Zhao.

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Appendices

Appendix 1: Survey Question Items

Management innovation (MS) (α = 0.881)

Absorptive capacity (AC) (α = 0.905)

MI1. My company has implemented major changes in the functions and responsibilities of work unit

AC1. Staff is equipped with excellent professional knowledge

MI2. My company has implemented significant changes in marketing concepts/strategies

AC2. Staff can acquire quickly and thoroughly new knowledge required by the work

MI3. My company has continuously implemented new management processes, approaches

AC3. Staff has better working skills than the staff of our competitors

MI4. My company has implemented significant changes in compensation schemes and related policies

AC4. Staff has the ability to use and organize the acquired knowledge

MI5. Significant efforts made on restructuring and improving the intra-unit coordination and communications

AC5. Staff strives to acquire working skills and job licenses in order to obtain pay raises, promotions and job offers

MI6. My company has implemented major organizational restructure

 

Appendix 2

2.1 (a) Results of Measurement Model and Validity Tests

 

Unstandardized

Standardized

SE

CR

P

MI1 ← Mgt, innovation

1.000

0.768

   

MI2 ← Mgt. innovation

0.941

0.748

0.064

14.614

***

MI3 ← Mgt. innovation

0.960

0.718

0.069

13.986

***

Mi4 ← Mgt. innovation

1.057

0.807

0.067

15.716

***

MI5 ← Mgt. innovation

0.804

0.600

0.071

11.263

***

MI6 ← Mgt. innovation

0.750

0.581

0.067

11.144

***

AC1 ← Absorb capacity

0.941

0.777

0.054

17.437

***

AC2 ← Absorb capacity

0.975

0.868

0.048

20.314

***

AC3 ← Absorb capacity

1.000

0.826

   

AC4 ← Absorb capacity

0.880

0.764

0.052

17.014

***

AC5 ← Absorb capacity

0.939

0.765

0.055

17.054

***

  1. Chi square = 71.125, df = 42, p = 0.003, Chi square/df = 1.693, CFI = 0.987, NFI = 0.968, TLI = 0.983, RMSEA = 0.041, SRMR = 0.035)

2.2 (b) Results of Validity Tests

 

CR

AVE

MI

AC

Cronbach

Management innovation (MI)

0.856

0.542

0.709

 

0.881

Absorptive capacity (AC)

0.899

0.642

0.585

0.801

0.905

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Zhao, H., Ozer, M., Rong, W. et al. Do Management Innovations of Indigenous Firms Benefit from Managerial Spillovers from Multinational Enterprises?. Manag Int Rev 59, 919–947 (2019). https://doi.org/10.1007/s11575-019-00403-9

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  • DOI: https://doi.org/10.1007/s11575-019-00403-9

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