Digital governance and AI: boosting OFDI’s impact on regional innovation performance

Abstract In the realm of global innovation, outward foreign direct investment (OFDI) serves as a pivotal channel for firms to integrate into international innovation networks. However, scant research has probed into the impact mechanisms of OFDI on firms’ innovation, particularly in the era of digitization and artificial intelligence (AI). In this study, we investigate OFDI’s effect on regional innovation performance by analysing a panel data of Chinese provinces. We find that OFDI significantly promotes the performance of regional innovation development. Moreover, we also identify two moderating factors, digital governance and AI, which significantly enhance the effect of OFDI on regional innovation performance.