This study investigates the strategic responses of Chinese multinational enterprises (MNEs) to U.S. sanctions by reallocating their global pioneering inventions. Drawing on a resource geographical reallocation perspective, we conceptualize pioneering inventions as a scarce and strategically important resource. We posit that when MNEs face heightened operational constraints in a host country due to sanctions, they are likely to reallocate this resource to other comparable host regions to mitigate the adverse effects. Given the geopolitical dynamics among the U.S., Europe, and China, we hypothesize that sanctioned MNEs reduce their pioneering invention activities in the U.S. while simultaneously increasing such activities in Europe. Additionally, firms with more U.S. subsidiaries tend to reduce more pioneering inventions in the U.S., while firms with more European subsidiaries are inclined to increase more pioneering inventions in Europe. Evidence based a sample of Chinese A-share listed MNEs from 2013 to 2021 supports our predictions.
