Double-edged sword effect of independent innovations and foreign cooperation: evidence from China

How do independent innovations impact firm performance? Based upon exploratory learning perspective, we argue that independent innovations will exhibit a double-edged sword effect on firm performance over time. Further, we view cooperation with foreign partners as complementary assets, and examine the dynamical moderating effect of such complementary assets on the relationship between independent innovations and firm performance. By analyzing a sample of Chinese firms, we find that independent innovations can enhance long term firm performance, but dampen short term firm performance. Further, our results show that cooperating with foreign partners as complementary assets will improve the relationship between independent innovations and firm short term performance.