Knowledge-seeking and firm international performance: Evidence from Chinese multinational enterprises

Abstract This study focuses on whether the outward foreign direct investment (OFDI) of Chinese multinational enterprises (MEs) can improve firm international performance by seeking and transferring knowledge from developed markets (DMs). To control for the endogeneity and self-selection problem when deciding whether overseas investment should be accepted, propensity score matching (PSM) and difference-in-difference (DID) methods are combined to test the hypothesis. Samples of Chinese A-share listed firms over the period 2003–2018 are used to test the effects of knowledge seeking on firms' international performance. The empirical results indicate that Chinese EMs' OFDI in DMs can indeed improve their competitiveness in the world market through a combination of reverse spillovers and knowledge transfer.