How does strategic orientation matter in Chinese firms?

As China continues to transition toward a market economy, how strategic orientation affects firm performance has received significant attention. This article reviews the extant literature with a framework that depicts contemporary work on strategic orientation, the drivers of strategic orientation, and its boundary conditions. We identify important research gaps and propose to integrate institutional theory, dynamic capability perspective, and the knowledge-based view within the strategic orientation research stream for future investigations.

Can entrepreneurial orientation improve R&D alliance performance? An absorptive capacity perspective

Research and Development (R&D) alliance studies maintain that alliance partners’ entrepreneurial interactions that pursue innovation opportunities through collective exploitation and exploration of knowledge resources lead to alliance success. Despite the importance of productive resource exchange and generation through such interactions, performance-by-alliance mechanisms remain under-researched. In this study, we develop a theoretical framework hypothesizing that the entrepreneurial orientation (EO) of alliance firms, which underlies their approach to seeking and utilizing resources productively, has a potential impact on their R&D alliance performance, depending on their absorptive capacity (AC). To specify the value creation and capture mechanism in the alliance, we adopt two performance indicators: technological competitiveness and business performance. Findings from a study of 218 small technology-intensive firms conducting R&D alliance projects show that EO translates into business performance through technological competitiveness and that AC leverages the alliance performance implications of EO. The results suggest that EO–AC complementarity is a strategic stimulant that triggers firms to extract greater benefits from R&D alliances.     

Board turnover in Taiwan’s public firms: An empirical study

Using a data set of 220 Taiwanese public firms with 2,200 observations over a ten-year period representing Taiwan’s economic takeoff period in the late 1990s, as well as six follow-up interviews conducted with top managers several years hence, this research examines the propensity of an important change variable for firms: the turnover of boards of directors. Specifically, it examines the relationship between board turnover and the organization’s environment, firm performance, and the largest shareholder’s control during a key period of economic transition and growth for Taiwan. The results show that substantial changes in board composition, though still not especially common in Taiwan, do occur, even in closely held companies. Turnover in the board is negatively related to the largest shareholder’s control power as well as firm performance. Board changes however, are not related to the environmental munificence and dynamism. These results are rather consistent with related research on firms in ethnic Chinese communities which suggests that top management and board turnover while not common, does sometimes occur, and more recent institutional and industrial change in Taiwan is likely encouraging further governance reform. This has implications for important facets of firm governance and change, as well as expanding our knowledge about firms domiciled in an ethnic Chinese community, particularly during times of economic transition and growth. Follow-up interviews with four top managers from our sample, along with one consultant and one government official in Taiwan provided additional confirmation and clarification of our results.     

The influence of the structure of social networks on academic spin-offs’ entrepreneurial orientation

This paper has been designed to analyse the impact of the structure of social networks on academic spin-offs’ entrepreneurial orientation. We have specifically focus on both size and frequency of three different types of social networks: informal networks (composed of family and friends); market networks (composed of agents belonging to the business context); and university support networks (composed of university institutions and agents). With the premises of Resource Dependence Theory as theoretical background and drawing on a sample of 167 Spanish academic spinoffs, results of regression analysis have highlighted the positive influence of market networks and university support networks on the enhancement of academic spin-offs’ entrepreneurial orientation, as well as the null impact exerted by informal networks. Our paper expands the research developed in the fields of academic entrepreneurship, social networks and Resource Dependence Theory and offers some suggestions to academic spin-offs’ managers and university support institutions.     

An empirical study of manufacturing flexibility of exporting firms in China: How do strategic and organizational contexts matter?

Using evidence from exporting firms in China, this research aims to determine the conditions that foster manufacturing flexibility and the way in which firms support it. The contingency perspective and the competence and capability theory are utilized to develop a framework to enhance the knowledge of internal competence, external flexibility, and manufacturing performance, and the understanding of the moderating roles of strategic and organizational choice on the competence-flexibility and flexibility-performance relationships. Empirical evidence from a sample of 222 export product/market ventures confirmed the main effect that manufacturing, assembly outsourcing, and marketing competencies support a firm's manufacturing flexibility and in turn enhance manufacturing performance. Several notable moderating effects were also identified. Although a strategic emphasis on low-cost manufacturing and long-term contracting weakens a firm's transformation of core competencies into flexible capabilities, specific organizational choices regarding private ownership and direct exporting strengthen the conversion of manufacturing flexibility to superior manufacturing performance.     

Do firms sell forward for strategic reasons? An application to the wholesale market for natural gas

Cournot models of oligopolistic interaction in forward and spot markets have shown that firms may sell forward for risk-hedging reasons only, or for both risk-hedging and strategic considerations. Using data from the Dutch wholesale market for natural gas where we observe the number of players, spot and forward sales, churn rates and prices, this paper presents evidence that strategic reasons play an important role at explaining the observed firms’ hedging activity. Our test for strategic behavior is based on the theoretical relationship between the number of sellers and the incentives to sell forward: if risk-hedging is the only motive behind firms’ decision to sell forward, then hedging activity ought to decrease in the number of firms; otherwise, if strategic reasons are relevant, then firms incentives to sell forward should increase in the number of competitors.     

Chinese firms’ sustainable development—The role of future orientation,environmental commitment,and employee training

In this research, we study the issues of corporate sustainable development in China. Based on relevant research, we propose a theoretical model showing the relationship among business environmental commitment, cultural value, employee training, and firm performance of sustainable development. It is argued that a cultural value (i.e., organizational future orientation) should be a key antecedent predicting business environmental commitment. On the other hand, a firm’s sustainable performance, such as performance in environmental protection, should be a major consequence of its business environmental commitment. Moreover, the relationship between business environmental commitment and sustainable performance can be moderated positively by the level of employee training. Other conditions being equal, the better the employee training is, the stronger the relationship between business environmental commitment and sustainable development performance. Testing the relevant hypotheses in China, we find evidence supporting our model proposed in this paper. We conclude with a discussion on the implications of our findings for academic researchers and practitioners.     

Explaining the entrepreneurial orientation–performance relationship in emerging economies: The intermediate roles of absorptive capacity and improvisation

Research has established the relevance of entrepreneurial orientation (EO) to firm performance but skepticism remains because of the ambiguity surrounding how EO might improve firm performance. We examine the key concepts of absorptive capacity and improvisation as two alternative learning modes serving as intermediate steps between EO and firm performance. Locating our study within manufacturing SMEs in Malaysia, we find that absorptive capacity enhances the EO–performance relationship, both as a moderator and a mediator. In contrast to expectations, however, improvisation showed no such effects but conferred its own separate benefits instead. We further discuss the different effects of these learning modes on high performance and low performance groups.     

What factors of early-stage innovative projects are likely to drive projects’ success? A longitudinal analysis of Korean entrepreneurial firms

Previous studies have identified the factors affecting successful technology commercialization as outcomes of R&D projects. However, most of them have used cross-sectional data, whereas there is a dearth of literature using longitudinal data analysis. Longitudinal analysis is essential for investigating the characteristics of early-stage innovative projects due to the inherent time lag between project evaluation and commercialization. Therefore, this study examines the early-stage project characteristics that can be used as meaningful evaluation criteria for predicting success, particularly in technology commercialization. We collected data on the ex-ante evaluation results and ex-post commercialization results of R&D projects pursued by entrepreneurial firms. We then conducted a logistic regression analysis and identified three market-related factors as significant in driving technology commercialization success in the early stages of technology development: market potential, commercialization plan, and market condition.     

Governance and capabilities: Asia’s entrepreneurial performance and stock of venture forms

Asian economies display large evident differences in their entrepreneurial capabilities and performance. While existing explanations of these differences have largely focused on formal and informal background institutions, we instead emphasize differences in national stocks of venture forms. We suggest that alternate venture forms, because of their different governance characteristics, possess unique entrepreneurial capabilities and pursue distinct opportunities. Consequently, nations must possess a diverse and balanced stock of venture forms and have such forms engaged in the unique and complementary activities for which they are best suited. Viewed in this light, addressing national limitations in entrepreneurial performance requires changes in stocks of venture forms. In developing the policy implications of our analysis, we highlight the past successes and current development challenges of Japan, Korea, Singapore, Hong Kong, Taiwan, and mainland China.     

Understanding farmers’ valuation of agricultural insurance: Evidence from Vietnam

Agricultural index insurance offers smallholder farmers the potential to manage pervasive weather and environmental risks, and smooth income over time. Yet despite the potential benefits, take-up of index insurance has been largely disappointing. We employ a novel approach to investigate the reasons for low demand and we confirm that farmers systematically undervalue agricultural index insurance. We find that access to private transfers acts as a substitute for insurance demand, while membership of a farmer’s union helps explain why farmers value index insurance. Finally, we find that individual riskiness is positively related to willingness to pay for agricultural index insurance and interpret this as further evidence that, within the context of basis risk and lack of trust in insurers, farmers valuation of agricultural index insurance can be better understood through behavioural theories such as ambiguity aversion or prospect theory.     

An evaluation of China's evolving broadband policy: An ecosystem’s perspective

Although it is generally agreed that governments should have some roles in the development of broadband, questions about the specific role of governments remain unanswered, particularly from the perspective of developing countries. This paper evaluates China’s evolving broadband policy by developing a two-dimensional analytical framework, with the different stages of broadband development represented by columns and the four components of broadband ecosystem represented by rows. Generally speaking, China's telecommunications development has been driven by investments from government-allied entities and features a strong industrial policy. However, the Chinese government has chosen a somewhat soft-intervention approach in broadband development and relied on the market itself to grow by creating a competitive market structure. As the market has recently evolved to a certain degree of saturation, there is a seemingly shift of emphasis in China's broadband policy from infrastructure buildup and service provision to application creation and user demand stimulation. However, China’s broadband future is uncertain due to unsettled but important institutional and financial issues. Policy changes appear not to keep up with the broadband ecosystem evolution.     

China’s Antimonopoly Law 2008: An Overview

This article outlines the economic, legal, and political background, general features, main provisions, and enforcement mechanisms of China??s Antimonopoly Law 2008 and describes some early developments in its application.     

Competitive dynamics research: An insider’s odyssey

This paper introduces competitive dynamics research, a body of work that has emerged in the strategic management field over the last two decades. I will focus on my scholarly pursuit—both the substance and the process—during the early years of my faculty career. I will use my twelve core publications written during this period to outline the entire research program, highlight the makeup of each of the four sub-streams of the program, and show how these streams are linked. I will also share my personal learning in the process of building this research program. The paper aims to convey some firsthand experience for researchers and scholars, especially those starting in their careers and international scholars who are interested in publishing in major U.S.-based journals, so they can construct their own research programs and cope with the manifold process challenges in research and publishing.

Effect of agglomeration on firms’ research and development investment: a U-shaped relationship

Extant research on how agglomeration affects firms’ R&D investment reveals conflicting views. Some studies suggest that, owing to free riding arising from knowledge spillovers, agglomeration reduces firms’ R&D investment, whereas others find that it creates additional incentives for innovation through intensifying local competition, thereby increasing firms’ R&D investment. Thus, this study attempts to reconcile these two conflicting views. We propose a U-shaped relationship between agglomeration and firms’ R&D investment; that is, when the extent of agglomeration is low, knowledge spillover effects are important, while local competition is negligible. The free riding effects dominate local competition effects. Therefore, firms’ R&D investment decreases with the extent of agglomeration at a decreasing rate. By contrast, when the extent of agglomeration is high, local competition becomes the dominant force. Consequently, firms’ R&D investment increases with the extent of agglomeration at an increasing rate. Using data from 299,256 manufacturing firms in China, we find that firms’ R&D investment first decreases with the extent of agglomeration to reach a minimum, then increases as the extent of agglomeration continues to rise. These results indicate that there is a robust U-shaped relationship between agglomeration and firms’ R&D investment.     

Understanding pastoralists’ dynamic insurance uptake decisions: Evidence from four-year panel data in Ethiopia

Despite the demonstrated benefits of index insurance, its adoption rate remains low in many developing countries. While a growing literature explores the factors associated with insurance uptake, we still know little about its dynamic patterns. Using a unique data set covering four years and six semi-annual sales periods of an index-based livestock insurance (IBLI) product in southern Ethiopia, we examine the dynamics of pastoralists’ demand for IBLI. We find that reduced insurance premiums induce households to purchase IBLI. While a one-shot subsidy can create a price reference point that may reduce the subsequent uptake, we do not find such price-anchoring effects. We also find that overall uptake decision is positively correlated intertemporally, although there is no strong evidence for learning by doing or learning from others. Finally, we show that pastoralists are more likely to purchase IBLI when drought risk is high, consistent with the existence of spatiotemporal adverse selection. We discuss the potential of distributing discount coupons to trigger initial uptake and adjusting premium rates dynamically to avoid spatiotemporal adverse selection as effective policy tools toward sustainable livestock insurance. Overall, our study signifies the importance of an empirical analysis that considers the dynamic demand structure.     

Creating relational rents: The effect of business groups on affiliated firms’ performance in Indonesia

This research attempts to extend the discussion of business groups in emerging economies by treating business groups as a form of interorganizational network that generates relational rents among affiliated firms by creating technological and managerial capabilities. Based on the relational view, this research investigates whether value created by business groups depends upon sharing, combining, and exchanging unique and specific resources or assets among affiliated firms. Results show that technological capabilities contribute to create relational rents in terms of affiliated firms’ investment in R&D and human capital. Managerial capabilities also contributed to generating relational rents through investment in managerial knowledge acquisition for affiliated firms without R&D units and in training for affiliated firms with R&D units. However, learning by exporting and learning from imported input do not yield relational rents within business groups. Overall, these findings reveal that business groups as interorganizational networks are contingent on their internal, unique, and specific capabilities, as social capital theory argues.