Learning from institutional diversity to innovate: a study of Chinese exporters in digital industries

While Chinese digital exporters such as Huawei and Lenovo are well known for their broad overseas markets, it is less explored how the markets’ institutional diversity influences their innovation performance. We propose that the institutional diversity of an exporter’s overseas markets tends to facilitate the exporter’s deliberate learning and adaptation, building a diverse knowledge pool that gives rise to innovation. The exporter’s capabilities and incentives for learning strengthen that positive relationship. We examined the argument with data of 14,701 Chinese digital exporters covering 2000–2007. We found that Chinese firms exporting to more institutionally–diverse markets sold more new products than those whose markets were less institutionally diverse. The benefits accrue more to the exporters with more carry-along trade business but less state-ownership. Managerial implications and future research directions are discussed.