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<p>By integrating data on the internationalization of Chinese multinationals, information on digital trade barriers (DTBs) in various countries and the data intensity of different industries in China, this study empirically examines the differential relationship between firm-level DTBs and both radical and incremental innovations of multinational enterprises (MNEs). Our findings reveal a dual pattern: DTBs are negatively associated with MNEs’ incremental innovation and positively associated with radical innovation. Mechanism analyses provide evidence consistent with two complementary channels: DTBs are associated with lower incremental innovation partly linked to cost-driven constraints and with higher radical innovation partly linked to risk-driven incentives. Heterogeneity analyses show that the positive association between DTBs and radical innovation is more pronounced among state-owned and mature enterprise, while these characteristics differ in their capacity to weaken the negative association between DTBs and incremental innovation. Our study contributes to international business research by highlighting the macro-level role of DTBs and developing a “strategic rebalancing” framework that integrates transaction cost economics and resource dependence theory to explain the systematic patterns of incremental and radical innovations observed among emerging-market MNEs facing DTBs.</p>

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Digital protectionism and innovation adaptation: strategic responses of chinese multinationals to digital trade barriers

  • 期刊论文

  • 发表日期：

    2026年6月24日

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  • Chunying Li,
  • Hao Shen,
  • Yu Gao,
  • Wei Deng

摘要

By integrating data on the internationalization of Chinese multinationals, information on digital trade barriers (DTBs) in various countries and the data intensity of different industries in China, this study empirically examines the differential relationship between firm-level DTBs and both radical and incremental innovations of multinational enterprises (MNEs). Our findings reveal a dual pattern: DTBs are negatively associated with MNEs’ incremental innovation and positively associated with radical innovation. Mechanism analyses provide evidence consistent with two complementary channels: DTBs are associated with lower incremental innovation partly linked to cost-driven constraints and with higher radical innovation partly linked to risk-driven incentives. Heterogeneity analyses show that the positive association between DTBs and radical innovation is more pronounced among state-owned and mature enterprise, while these characteristics differ in their capacity to weaken the negative association between DTBs and incremental innovation. Our study contributes to international business research by highlighting the macro-level role of DTBs and developing a “strategic rebalancing” framework that integrates transaction cost economics and resource dependence theory to explain the systematic patterns of incremental and radical innovations observed among emerging-market MNEs facing DTBs.