Chinese market as a source of global innovation: Foreign MNCs’ R&D Activities in China

This paper studies the influence of host country peculiarities on R&D activities of foreign MNCs in China. Through case study approach, we analyzed four Italian companies that have R&D and innovative activities in China. We found that innovation activities of foreign MNCs in China are affected by host country characteristics on three dimensions: state intervention; local competition, and local market peculiarities. We show how Chinese competitive context can be a source of global innovation if stimuli are properly received at both local and corporate level and we derive a taxonomy of innovation that might originate from foreign MNCs’ R&D activities in China. Our case studies confirm an evolution path of foreign R&D activities from an exploitative to an explorative nature. Finally, future research directions are suggested