R&D activities dispersion and innovation: implications for firms in China

Despite the increasing attention paid to the dispersion of research and development (R&D) activities, scholars have presented opposing arguments with respect to its effects on innovation output to date. To address this controversy, we conceptualize and empirically test a model that links different dimensions of R&D activities dispersion and innovation output. Moreover, few studies have explicitly addressed R&D activities dispersion among firms in emerging markets. Using a sample of 244 Chinese high-tech firms collected from 2000 to 2009, this study aims to determine how firms in developing countries domestically and globally distribute their activities. The results show that a firm in an emerging market with a decentralized R&D organizational structure with geographically centralized R&D activities has better innovation outputs. Moreover, institutional development positively moderates the relationship between the dispersion of R&D activities and innovation performance.