The Impact of Interaction Between Domestic Cross-Regional Investment and OFDI on Enterprise Innovation: Evidence from China

Prior literature studies domestic cross-regional investment and OFDI separately, leaving their interaction unexplored. We argue the two are synergistic because OFDI’s reverse technology spillovers require absorptive capacity from domestic cross-regional networks, while domestic investment requires international knowledge from OFDI to avoid path dependence. Utilizing Chinese A-share listed firms over 2013–2023, we find that the synergy between domestic cross-regional investment and OFDI significantly improves firms’ innovation performance. Mechanism tests identify knowledge acquisition, information exchange, and economies of scale as channels. Effects are stronger in high-R&D, high-tech, non-state-owned firms, and amplified in large firms, developed-economy OFDI firms, and high-marketization regions. These findings extend the internal-external investment integration framework, offering policy implications for emerging economies combining cross-regional and outward investment for innovation catch-up.