Innovation of Pharmaceutical EMNEs: Roles of Absorptive Capacity, Internationalization and Government

This study examines the relationship between absorptive capacity and innovation performance of emerging market multinational enterprises (EMNEs). We find that absorptive capacity contributes to not only firm innovation in general but also exploitative and exploratory innovation in particular when outward FDI breadth increases. In contrast, when outward FDI depth is invoked, there is no clear impact on the firm innovation in general. In addition, we reveal the positive moderating roles of government subsidies and double-edged effects of government intervention. Our study contributes to the exploitation and exploration literature in the context of EMNEs.