Masahiro Endoh: Qu and Wei's paper investigates which institutional factors in China boost innovation activities in indigenous firms and how inward FDI into China affects them. The beauty of this paper is that it uses both econometric analysis and case studies, and the authors include findings from their interviews with senior managers from five Chinese companies for the purpose of interpreting the results of econometric analyses. The authors find from their econometric analysis that some institutional factors, such as government assistance and firms’ external network, positively affect indigenous Chinese firms’ innovation, whereas inward FDI negatively affects their propensity of patenting and the number of their patents granted. In addition, they refer to some statements from interviewees to support and enrich their interpretation of regression results.
I would like to first discuss the negative results of FDI on innovation activities. There are at least three points we should recognize. First, regression...