Internal　R&D　and　outward　foreign　direct　investment　in　developed　economies　(OFDI-in-DE)　are　recognized　as　two　important　elements　for　emerging　economy　firms　(EEFs)　attempting　to　innovate.　However,　it　is　less　clear　whether　these　elements　act　as　complements　or　substitutes　to　each　other.　Building　on　the　attention-based　view,　we　explore　how　OFDI-in-DE　affects　internal　R&D　in　terms　of　input　scale　and　output　efficiency.　Using　a　longitudinal　sample　of　Chinese　listed　firms　from　2006　to　2018,　we　find　that　OFDI-in-DE　not　only　leads　to　a　reduction　in　EEFs＇　R&D　investment,　but　also　weakens　the　positive　effect　of　the　investment　on　firms＇　innovation　performance,　measured　by　the　number　of　patent　applications　filed　during　a　specific　period.　This　suggests　that　EEFs＇　OFDI-in-DE　substitutes　for　internal　R&D　investments　in　both　scale　and　efficiency　aspects.　Our　results　also　show　that　these　effects　vary　depending　on　market　competition　and　organizational　slack.　Specifically,　the　substitution　effects　become　stronger　in　EEFs　operating　in　highly　competitive　industries,　but　weaker　in　those　with　ample　organizational　slack.　Our　study　sheds　light　on　the　interrelation　between　internal　R&D　and　OFDI-in-DE　activities　for　EEFs.