Persistent innovation underperformance and firms' R&D internationalization: The moderating effects of multidimensional TMT human capital

Abstract The antecedents of firms' R&D internationalization have attracted the attention and discussion of scholars. However, the manner and circumstances in which a firm's past innovation performance affects its R&D internationalization decisions have not yet been discussed. Based on the behavioral theory of the firm (BTOF), we propose that persistent innovation underperformance might serve as a motivating factor to trigger R&D internationalization and that the top management team (TMT) determines how responsive to persistent innovation underperformance the firm is likely to be. Results from empirical analyses of panel data from 1323 listed Chinese manufacturing companies over a 9-year period indicate that a longer duration of persistent innovation underperformance increases the likelihood that firms will implement R&D internationalization. Integrating the moderating roles of multidimensional TMT human capital, we further find that TMT education level and technical background strengthen the abovementioned relationship, while TMT international experience weakens the abovementioned relationship. The contributions, implications, and limitations of this study are fully discussed.