The Innovativeness and Heterogeneity of Foreign-Invested High-Tech Companies in Shanghai INGO LIEFNER, YEHUA DENNIS WEI, AND GANG ZENG ABSTRACT China has taken a foreign direct investment-based approach toward increasing its capital and knowledge base, and developing into an innovative economy. However, little quantitative evidence exists about the factors that drive innovations of foreign-invested enterprises (FIEs) there. This paper uses survey data from high-technology firms in Shanghai to discuss factors affecting their innovativeness. It takes the concepts of absorptive capacity, export orientation, and innovation- related cooperation as a starting point. It highlights how the interplay of strategies and resources affects innovativeness and heterogeneity of FIEs.The most innovative FIEs are endowed with a strong human capital base and R&D activities, which at the same time target export markets and whose cooperative partners involve firms other than their parent company.The results underline the necessity to differentiate between the different types of FIEs when examining their innovativeness. A central pillar of China’s economic development strategy is foreign direct investment (FDI) (Görg and Greenaway 2004; Kim 1991; Wei and Liefner 2012). Foreign investors are offered access to the country’s huge market and benefit from a range of preferential policies. In exchange, the Chinese government expects a substantial knowledge transfer from transnational companies (TNCs) to their Chinese subsidiaries (Hayter and Han 1998). The intention is that the sub- sidiaries (also known as foreign-invested enterprises, FIEs) contribute to innova- tions generated in China. However, the literature does not address the extent to which FIEs produce innovations in China. Empirical results often contain contradictions. Niosi and Ingo Liefner is a professor in Justus Liebig University Giessen, Giessen, Germany. His e-mail address is: Ingo.Liefner@geogr.uni-giessen.de. Yehua DennisWei is a professor in the University of Utah, Salt Lake City, UT, USA. His e-mail address is: wei@geog.utah.edu. Gang Zeng is a professor in East China Normal University, Shanghai, China. His e-mail address is: gzeng@re.ecnu.edu.cn. The authors like to acknowledge the funding of the Alexander von Humboldt foundation (3.1 TCVERL- DEU/1131699) and the German Research Foundation (Scha198/42-1). We also like to thank the reviewers for helpful comments. Growth and Change Vol. 44 No. 3 (September 2013), pp. 522–549 Submitted December 2010; revised January 2011; accepted March 2012. © 2013 Wiley Periodicals, Inc