Title: Effect of the digital transformation of firms in a developing country on their reverse innovation: the complementary roles of multi-contexts

Authors: Xu Chu; Yuntao Bai

Addresses: School of Management, Research Institute for Doing Business in China, Xiamen University, No. 422, Siming South Road, Siming District, Xiamen City, Fujian Province, China ' School of Management, Research Institute for Doing Business in China, Xiamen University, No. 422, Siming South Road, Siming District, Xiamen City, Fujian Province, China

Abstract: Reverse innovation (RI) research on multinational companies (MNCs) in developed countries has flourished, while the driving mechanism of RI in firms in developing countries remains understudied. From a resource dependence theory perspective, this study proposes that digital transformation (DT) can serve as a strategic arrangement with convergence, connectivity, and image-shaping functions to help overcome the liability of foreignness of firms in developing countries, thereby facilitating their RI. Our evidence of 17,397 observations from Chinese listed manufacturing companies supports the relationship between DT and RI. Additionally, we find that several contextual factors (e.g., executives' overseas backgrounds (OSB), firm's internationalisation degree (INT), and regional market intermediaries' development (RMI)) facilitate a positive DT-RI relationship by reducing firms' liability of foreignness. Our research contributes to RI's driving mechanism from firms in developing countries through the DT perspective and the awareness of the complementary roles of multi-contexts.

Keywords: digital transformation; DT; reverse innovation; RI; multi-contexts; complementary roles.

DOI: 10.1504/IJTM.2025.143582

International Journal of Technology Management, 2025 Vol.97 No.2/3, pp.275 - 304

Received: 23 May 2022
Accepted: 03 Apr 2023
Published online: 02 Jan 2025 *

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