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Hiring overseas-returned executives is increasingly regarded by researchers and society as an important business strategy. This paper investigates the effects of overseas-returned executives in the top management team on firms in China. We propose a mechanism-based framework to study how overseas-returned executives affect firm innovation. Using listed companies in China's manufacturing industry, we find that overseas-returned executives have a positive effect on firm innovation, especially for high-tech firms, large firms, state-owned firms and returned executives with foreign work experience. Increase in research and development investment is an important channel through which overseas-returned executives affect firm innovation.
Fu et al. (Sun,) studied this question.