Foreign divestments of IJVs and innovation output: The moderating role of inward technology licensing

This study investigates how the innovation output is affected by foreign divestments in International Joint Ventures (IJVs) and explores whether this impact depends on the industry-specific context of the divested IJVs. In particular, we examine the moderating role of inward technology licensing, distinguishing between licensing-in foreign and domestic technology. The conceptual model is tested with data from the Chinese Industrial Enterprise Database and the Innovative Enterprise Database. Using PSM and DID method, the findings show that (1) foreign divestments of IJVs have negative impacts on innovation output, (2) licensing-in foreign technology weakens the negative impacts, and (3) licensing-in domestic technology strengthens the negative impacts. • Examines the impact of foreign divestment of IJVs on innovation output. • Inward technology licensing plays a moderating role. • Examines the geographic origins of inward technology licensing. • Effects of licensing-in foreign technology and domestic technology are opposite.