| Summary: | This thesis examines the complex process of innovation catch-up in emerging market firms (EMFs) from multiple perspectives. Through three interconnected chapters, the research explores the theoretical foundations and empirical evidence related to EMFs’ innovation catch-up, focusing on its two dimensions: the influence of managerial teams and the impact on firm-level capabilities and value.
The first chapter lays the foundation by systematically reviewing the literature on innovation catch-up, proposing a comprehensive framework and identifying key research gaps. I raise questions: What aspects do lagging EMFs catch up in, and who are the key actors involved in different catch-up processes? When do lagging EMFs choose to promote catch-up? How can firms achieve catch-up in emerging markets (EMs)? This paper reviews innovation catch-up research published in top-tier journals over 27 years, from 1997 to 2023.
The second chapter explores the antecedent of innovation catch-up by empirically investigating the strategies that lagging EMFs employ, particularly focusing on the roles of executive returnees. I test two dimensions of catch-up - innovation output and the transfer of research-oriented knowledge that quantifies the firm-level efficiency of applying frontier research-oriented knowledge to innovation outcomes. The theoretical framework suggests that
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returnees in top management teams (TMTs) who take a hands-on approach to innovation activities contribute to lagging EMFs’ catch-up with global leaders in transferring research- oriented knowledge, not innovation output. We further posit that laggards with executive returnees taking a hands-on approach to innovation achieve a more significant catch-up in the transfer of research-oriented knowledge than laggards with a higher number of executive returnees. Using a sample of Chinese-listed and US-listed firms in the pharmaceutical and biotechnological sectors between 2013 and 2019 and applying content analysis through firm- level patent and top-tier publication data, I find support for the hypotheses. Overall, the paper reveals the importance of TMTs' characteristics and daily innovation involvement in achieving significant catch-up in two dimensions in EMs.
The third chapter extends the analysis to the economic implications of innovation catch-up, specifically examining how lagging EMFs’ catch-up in two dimensions influences firm market value. Based on the data from Chinese-listed and US-listed pharmaceutical and biotechnological firms, the findings show that catch-up in the transfer of research-oriented knowledge is positively associated with the market value of lagging EMFs, measured by Tobin’s q. The empirical result also indicates that this positive association is stronger for POEs than SOEs in EMs. The paper sheds light on the economic impact of lagging EMFs’ innovation catch-up for research and practice.
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