How “Belt and Road” initiative implementation has influenced R&D outcomes of Chinese enterprises: asset‐exploitation or knowledge transfer?

Abstract

As an Outward Foreign Direct Investment (OFDI) promotion policy which aims to transform and upgrade Chinese firms, the 'Belt and Road' (B&R) Initiative has been widely discussed with regard to its influence on R&D activities. Many studies have associated this topic with the relationship between OFDI and R&D activities, however, the difference between the OFDI promotion policy and the OFDI has been neglected, resulting in little understanding of the effects of B&R implementation on R&D activities related to established OFDIs. By analyzing how the implementation of B&R affects asset-exploitation and knowledge transfer, this paper provides a new perspective to help understand if and how Chinese firms that have affiliates in B&R countries gain positive R&D outcomes from such a policy. This study examines a sample of Chinese-listed manufacturing firms from 2013 to 2017. Propensity Score Matching is used to construct a counterfactual framework and control for confounding problems from new OFDI entries. Difference-in-Differences is used to infer the policy effect of B&R implementation on R&D outcome of Chinese firms that have affiliates in B&R countries. Results show a continuously positive effect on R&D outcomes mediated by the increase in R&D expenditure, along with a directly weak-positive effect on R&D outcomes in the short-run. The continuously positive effect may be viewed as a result of an improvement in asset-exploitation, while the directly weak-positive effect is more a result of an increase in knowledge transfer, leaving out technology transfer. Regarding differences among Chinese firms that invest in B&R countries with varying levels of economic 273

Introduction to the Special Issue on the New Silk Road of Innovation: R&D Networks, Knowledge Diffusions, and Open Innovation

“…Specifically in this SI, Crupi (2021) proposed new indices to study the technology transfer and boundary‐spanning activities in China, considering the complexity of the Chinese environment. In addition, Li et al (2021) found that knowledge transfer plays an important role in the policy effect of BRI implementation on R&D outcomes of Chinese firms that have affiliates in BRI‐related countries.…”

Market dominance, R&D grant funding, and innovation outcomes

“…To help address possible selection bias and endogeneity concerns, we employ propensity score matching or PSM (following Berube and Mohnen, 2009; Girma et al, 2010; Bozio et al, 2014). While we could have adopted other methods to improve our identification strategy (e.g., Entropy Balancing; Heckman 2‐stage), PSM appears to be one of the more common methods used based on recent prior literature (e.g., Li et al, 2020; Dai et al, 2020). On the positive side, PSM allows us to examine and report factors that relate to the likelihood of winning a grant (see Appendix Table B1), which provides some additional information on factors government agencies use to determine grant success 8…”