The Effect of Investing in China on Firms' Efficiency and Innovation Frontier

With the rapid development of globalization and technology, firms have to develop unique competence in coping with the increasing competitive environment. This research aims to discovery the influence of firms` resource/capability, scale economies, scope economies and experience on efficiency frontier and innovation capability which characterize the two basic strategic orientations, low cost and differentiate strategy. As `investing in China` is the most heating debate in Taiwan, this study also try to explore the influence and business implication of investing in China. Through this study, we hope to construct an essential structure that may provide useful references for academic and practical purpose. The empirical research finding is as follows. Scale economies and scope economies are found to exert positive influence on efficiency and innovation performance. Besides, this study indicates that investing in China has significant interactive influence on the key factors. Therefore, given the constrains in resources, it is necessary that investment decision and business strategy should be more effective, and make investment in China a source of competitiveness for companies.