Abstract:  In the context of open innovation, enterprises conduct global knowledge search targeting suppliers, manufacturers, consumers, universities, competitors, etc., in order to capture potential innovative opportunities by obtaining external knowledge. Therefore, many scholars try to explain enterprise innovation based on global knowledge search strategy. However, there is still a debate on whether global knowledge search can promote enterprise innovation. Some researchers believe that global knowledge search can enrich the firm’s knowledge base and innovative thinking, force the firm to renew learning and innovation ability faced by intense global competition, and create synergistic effect with internal R & D. In contrast, some other researchers argue that global knowledge search is full of uncertainty and that excessive global knowledge search hinders firm’ innovation performance. As such, some scholars break through the hypothesis of linear relationship between global knowledge searches and firm innovation, emphasizing that there is an inverted U-shaped relationship between them. They assumed that most of the existing studies only focus on whether global knowledge search affects enterprise innovation or not, ignoring the different impact of different scenarios and contingency factors on the relationship between them, that is, “how to influence" is rarely studied as an entry point. In this regard, we take China, the largest emerging economy, as the subject to explore the relationship between global knowledge search and Chinese enterprise innovation from a micro perspective. More importantly, the moderating effect of host country institution on the relationship between global knowledge search and firm innovation performance was emphasized, so as to clarify "how global knowledge search affect firm innovation".In the present study, the host country institution was divided into formal institution and informal institution according to previous literatures. The formal institution includes the legal rules and supervision quality which are directly related to the external search cost;and the informal institution contains the power distance and long-term orientation in the cultural system which influences the search efficiency and innovation performance by affecting the communication mechanism and cooperation stability. Therefore, this paper takes legal rules and regulatory quality, power distance and long-term orientation as proxy indicators of the formal and informal institutions respectively, to explore the moderating effect of host countries institutional factors in the relationship between global knowledge search and firm innovation performance, which contribute to enrich empirical evidence for open innovation theory. To do so, we combined the Chinese firm innovation data between 2008 and 2011 from the Ministry of Science and Technology, World Bank’s Governance Indicators and Hofstede’s cultural scores. By referring to Wang et al and Kafouros et al, we built our empirical model. The results show a significantly positive effect of global knowledge search on firm innovation performance, but there is no evidence of an inverted U-shaped relationship as prior research suggested. The reason may be that the external search of Chinese enterprises has not reached such a scale to hinder firm’s innovation, which is still in the rising stage of the overall inverted U-shaped relationship curve，or the negative effect can be overcome, leading to the "turning point" postponed or even disappeared. The results suggest that the "going out" strategy pursued by the Chinese government is reasonable and effective. Furthermore, by introducing the institutional factors of the host country into our model, we searched their regulatory effects. From the formal institution perspective, it can be found that rule of law and regulatory quality negatively moderate the positive effect of global knowledge search. From the informal institution perspective, long-term orientation moderates it positively, while power distance shows no significant moderating effect. The possible reason is that the host country with high power distance is similar to China's centralized cultural characteristics, so Chinese enterprises relying on political connections are not susceptible to the influence of power distance. On the contrary, they can be familiar with the overseas environment based on similar domestic business experience, thus overcoming the negative influence of power distance and acquiring knowledge and technology from overseas. This reflects that the existence of Chinese-style "relationship network", "government-enterprise relationship" and "centralization" leads to the Chinese-style innovation mode quite different from the Western economies. Through the choice of the host country, Chinese enterprises have effectively used their special advantages, which has delayed the “turning point” and provided a possible answer to the non-linear conclusions of global knowledge search. In addition, by using other independent and dependent proxy variables, introducing the applied patent number of domestic countries with oversea research and development centers as instrument variant, performing a variety of estimation methods, the regression results remain to be robust. To determine the effect of global knowledge search on innovation quality, we further divided the patent into three types, including patent for invention, patent for utility models, and design patent. According to their technology levels, the high-tech patent, patent forinvention, was regarded as disruptive innovation, while the low-tech patent, patent for utility models and design patent, was summarized as incremental innovation. As expected, global knowledge search promotes more incremental innovation rather than disruptive innovation in the current context of host-country institution. In the future, it still requires internal R&D strength and overall knowledge fusion to promote disruptive innovation. By searching the effect of global knowledge search on firm’s innovation performance, we found that the "turning point" of China's open innovation has been put off, which means that global knowledge search still has space for innovation bonus in China. From the institutional perspective, this paper explores the moderating institutional factors, providing policy suggestions in the future. Firstly, the location layout of Chinese enterprises' global knowledge search strategy should break through the traditional thinking of selecting developed economies with complete system and advanced technology. In contrast, selecting host countries with similar institutional characteristics, and making full use of the mode of "relationship network" and "government-enterprise relationship” to host countries are important. Secondly, global knowledge search mainly promotes incremental innovation, but the development of Chinese enterprises' R&D capabilities cannot be ignored. It is more vital to emphasize enterprises' independent innovation capabilities in order to promote the disruptive innovation.

Key words: global knowledge search, firm innovation, host-country institution