Utilization of foreign knowledge by Chinese firms : effects of relationship- specific human capital and institutional externalities

Abstract

Emerging economy firms have become increasingly reliant on foreign sources of knowledge to upgrade capabilities, as previously closed societies have opened to international competition. Utilization of knowledge from foreign sources can be difficult for these companies, and risky relationship-specific human capital may be required. This thesis explores the conditions for utilization of foreign-source knowledge by Chinese firms using data from a sample of technology-intensive companies in the PRC. I find that relationship-specific human capital is important to knowledge utilization and that it is more likely when relationships provide additional externalities through effects on reputation.