One motivation behind R&D internationalization for emerging market multinationals (EM MNEs) is to expand international markets. We analyze whether the R&D internationalization of EM MNEs contributes to an improvement in international performance measured by foreign sales as a percentage of total sales (FSTS). Using panel data on China's listed companies, we introduce more scientific and normative indicators for measuring R&D internationalization in terms of geographic distribution (breadth) and overseas investment (depth). The empirical results reveal an inverted U-shaped relationship between R&D internationalization and FSTS. When the depth and breadth of R&D internationalization are within a certain range, international performance improves; when R&D internationalization extends beyond a critical point, international performance begins to decline. The findings show that product diversification has a significant moderating effect on the relationship between R&D internationalization breadth and international performance. The inverted U-shaped relationship that is observed becomes less positive and more negative, while the optimal value of R&D internationalization breadth decreases as product diversification increases.
Dr. Chunhui Tang is Associate Professor in the College of Business Administration at Zhejiang University of Finance and Economics, China.