Knowledge distance and innovation performance: the moderating role of internationalization breadth and depth

The primary goal of this research is to identify how and whether knowledge distance influences multinational enterprises’ innovation performance. Although international business scholars have acknowledged the importance of knowledge distance, the research question is under-explored. Based on the distance approach, this study provides a theoretical foundation for knowledge distance and empirically examines its impact on the innovation performance of multinational enterprises engaging in cross-border acquisitions. Furthermore, we investigated whether internationalization breadth and depth moderate knowledge distance-innovation performance. We examined Chinese-listed firms that made international acquisitions from 2010 to 2016 and found a negative relationship between knowledge distance and innovation performance. We also discovered that internationalization breadth and depth moderate the negative relationship between knowledge distance and innovation performance. Our study contributes to international business studies by providing the theoretical foundation and empirical results of knowledge distance in the international business context.