Innovation and internationalization: investigating Chinese multinationals in the pharmaceutical and traditional medicine industries

Abstract

This thesis examines how innovation, internationalization, and digitalization co-evolve in China’s Big Health Industry by integrating two complementary empirical settings: modern pharmaceuticals and Traditional Chinese Medicine (TCM). Study 1 theorizes and tests a nonlinear relationship between absorptive capacity and ambidextrous innovation in emerging-market multinationals (EMNEs). Using a multiyear panel of Chinese listed pharmaceutical firms and PPML estimators with extensive robustness checks, I find an inverted-U effect of R&D-based absorptive capacity on both exploratory and exploitative innovation, with a steeper curvature for exploratory innovation. Boundary conditions were explored in internationalization depth and breadth, BRI-oriented internationalization, and government subsidies, revealing when external knowledge access and institutional scaffolding amplify returns and induce coordination congestion. These results extend EMNE’s organizational learning, particularly, the “learning myopia” arguments, to an IB context, clarifying capability thresholds and geographic-relational contingencies.

Study 2 turns to TCM to analyze how digitalization and innovation are bidirectionally coupled and how this coupling shapes export-oriented internationalization. Combining firm-level digitalization measures with long-horizon outcomes and semi-structured interviews with practitioners and stakeholders, I show that digital tools reduce distance, strengthen connectivity, and accelerate iteration, converting knowledge assets into tradable and replicable advantages in a traditional industry. The triangulated evidence demonstrates that capability variables (absorptive capacity and digital capability) are non-monotonic and context-dependent and that geographic-institutional configurations and selective state support co-determine innovation outcomes and internationalization performance.

Together, these studies motivate a forward-looking Global Innovation Value Chain (GIVC) agenda that embeds knowledge generation–transformation–diffusion–innovation within global networks, advances the measurement of TCM innovation, and leverages multi-source, data-intensive methods for emerging-market inquiry. Managerially, this thesis offers guidance on capability portfolio design and international expansion strategies. For policy, it informs open-innovation governance, IP protection, and conditional support programs aligned with quality-of-internationalization goals.