Exploratory and exploitative OFDI from emerging markets: Impacts on firm performance

Qingqing Tang, Flora F. Gu, En Xie, Zhan Wu

Research output: Journal article publicationJournal articleAcademic researchpeer-review

1 Citation (Scopus)

Abstract

This study identifies exploratory and exploitative OFDI as two distinct approaches for emerging market (EM) firms to overcome their liability of foreignness in overseas markets. It assesses the performance impacts of both types of OFDI through investigating three sets of questions. (1) What are the differential impacts of exploratory and exploitative OFDI, and how long do they persist? (2) How do industry factors in the home country, including technological turbulence and competitive intensity, moderate these effects? And (3) how can firms balance these two types of OFDI across time? Based on multi-sourced data of 766 Chinese firms during 2008–2015, the results show that both types of OFDI promote performance, yet the positive effect of exploratory OFDI lasts longer than that of exploitative OFDI. Moreover, technological turbulence strengthens the effect of exploratory OFDI and weakens that of exploitative OFDI, but competitive intensity strengthens the effect of exploitative OFDI only. Finally, sequential ambidexterity improves firm performance through exploratory‒exploitative OFDI process.

Original languageEnglish
Article number101661
JournalInternational Business Review
Volume29
Issue number2
DOIs
Publication statusPublished - Apr 2020

Keywords

  • Competitive intensity
  • Emerging market (EM)
  • Exploitative OFDI
  • Exploratory OFDI
  • Sequential ambidexterity
  • Technological turbulence

ASJC Scopus subject areas

  • Business and International Management
  • Finance
  • Marketing

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