Asymmetric roles of business ties and political ties in product innovation

This study investigates the asymmetric roles of business ties and political ties in innovation processes. The study posits that business ties strengthen organizational competence and enhance the environmental fit. In contrast, political ties increase the environmental fit but ossify organizational internal routines. The study uses an extensive survey on 766 Chinese firms across multiple sectors to test hypotheses. The empirical results provide strong supports for hypotheses by showing that: (1) business ties have a positive impact on product innovation, indicating that despite different types of business ties, they share common features in enhancing product innovation; (2) political ties have an inverted U-shaped relationship with product innovation, indicating that the positive effect of political ties on product innovation would diminish as the costs of political ties outweigh the benefits.     

The moderating role of managerial ties in market orientation and innovation: An Asian perspective

This empirical study contributes to the extant literature by investigating the relations among market orientation, managerial ties and innovation simultaneously and interactively, from an Asian perspective. Our findings reveal that customer orientation and interfunctional coordination have a positive impact on innovation. Moreover, managerial ties play a moderation role in the market orientation–innovation linkage. Business ties enhance the relation between customer orientation and interfunctional coordination and innovation. On the other hand, business ties and competitor orientation have a negative interaction effect on innovation. In addition, political ties also dampen the relation between interfunctional coordination and innovation. Such results add new insights to the extant literature and provide implications for future research and marketing practices in Asia.     

How foreign firms achieve competitive advantage in the Chinese emerging economy: Managerial ties and market orientation

As China experience unprecedented changes in its social, legal, and economic institutions, on what should foreign firms focus more to overcome this challenge, managerial ties or market orientation? This study investigates how managerial ties and market orientation affect competitive advantage and, consequently, firm performance in China. On the basis of a survey of 179 foreign firms in China, we find that both managerial ties and market orientation can lead to firm success—but in different ways. Market orientation enhances firm performance by providing differentiation and cost advantages, whereas managerial ties improve performance through an institutional advantage (i.e., superiority in securing scarce resources and institutional support). Institutional advantage, in turn, leads to differentiation and cost advantages and consequently superior performance.     

Ethnic ties, location choice, and firm performance in foreign direct investment: A study of Taiwanese business groups FDI in China

This paper examines ethnic ties and their impact on FDI location choice and firm performance. Drawing on social network theory and using data from 88 Taiwanese business groups, the study tests the impact of ethnic ties on firm FDI location choice and performance outcomes in China. Results show that ethnic ties of top managers matter in facilitating firm FDI location choice. In contrast to our expectations however, ethnic ties do not help to improve firm performance in China. Implications of these results are discussed in view of existing literature and future research opportunities are delineated.     

Unpacking the relationship between an innovation strategy and firm performance: The role of task conflict and political activity

This article adds to extant literature by examining the contingent effect of two cross-functional processes on the relationship between the use of an innovation strategy and firm performance, namely, task conflict and political activity. The authors examine the effects of these processes with a sample of 260 firms. The positive relationship between the use of an innovation strategy and firm performance is stronger for higher levels of cross-functional task conflict and lower levels of cross-functional political activity. Furthermore, the authors find support for a configurational hypothesis: the innovation strategy-firm performance relationship is strongest for the high task conflict/low political activity configuration and weakest for the low task conflict/high political activity configuration. The results unveil two important cross-functional mechanisms influencing the extent to which the benefits of an innovation strategy can be reaped.     

Entrepreneurial orientation,market orientation,network ties,and performance: Study of entrepreneurial firms in a developing economy

Entrepreneurial orientation (EO), market orientation (MO) and network ties are typically modeled as separate antecedents of performance. However, the boundary conditions for such models are under-explored, as is their applicability to developing economy settings. Accordingly, drawing on institutional and social capital theories, the current paper argues that the performance benefits of EO and MO are complementary, and vary across different levels of social and business network ties. Using primary data gathered from entrepreneurial firms operating in Ghana, the study findings indicate that aligning high levels of EO and MO improves business performance, and particularly so when social and business network ties are well developed, since under these latter conditions, the performance benefits of aligning EO and MO are greatest.     

Productivity efficiency and firm size: An empirical analysis of foreign owned companies

There are various arguments about the impact of firm size on productivity growth. On one hand, it is claimed that large firms could be more efficient in production because they could use more specialized inputs, better coordinate their resources, etc. On the other hand, it is emphasized that small firms could be more efficient because they have flexible, non-hierarchical structures, and do not usually suffer from the so-called agency problem. This paper argues that size exerts an indirect effect on firms’ productivity, as it conditions the impact of internal factors on productivity. By using different methodological approaches to assess the impact of different characteristics of foreign owned firms on productivity, this paper analyzes to what extend the heterogeneous pattern of productivity can be accounted for by the levels of those factors.     

In the eye of the beholder: How regulatory focus and self-efficacy interact in influencing opportunity recognition

Although there is evidence that regulatory focus is associated with opportunity exploitation, there is a lack of research examining its role at the early stages of opportunity recognition. The present study makes two major contributions to address this gap. First, we demonstrate that entrepreneurs' promotion focus is positively related to opportunity recognition, whereas prevention focus is not significantly related to opportunity recognition. Second, integrating two theories of self-regulation – regulatory focus theory and self-efficacy theory – our findings reveal that a high promotion focus compensates for entrepreneurs' low levels of creative and entrepreneurial self-efficacy in opportunity recognition. Our study extends extant cognitive theories of opportunity recognition.     

The export performance of emerging economy firms: The influence of firm capabilities and institutional environments

We advance a two-stage theoretical model which contends that the export performance of emerging economy firms (EEFs) will depend both upon their firm-specific capabilities and their home institutional environments. Specifically, we argue that EEFs will be more likely to export when facing more uncertainty at home from greater political instability, substantial informal competition, and high corruption. Furthermore, we hypothesize that firms’ export intensities will be contingent upon specialized internal capabilities such as a skilled workforce, top managerial experience, and access to external technologies. We test these hypotheses using a dataset of more than 16,000 firms from the four BRIC economies (i.e., Brazil, Russia, China and India). Our results confirm that political instability and informal competition have robust effects on the export propensity of EEFs, whilst export intensity is contingent upon the availability of skilled workers and access to external technologies via licensing.     

Strategic and institutional effects on foreign IPO performance: Examining the impact of country of origin,corporate governance,and host country effects

Integrating signaling and institutional perspectives, we develop and test hypotheses relating institutions and corporate governance to foreign IPO success. Our investigation highlights the importance of three important drivers of foreign IPO success: home country legal institutions, corporate governance, and host capital market choice. This research demonstrates that board independence and country of origin effects are powerful signals. However, these factors do not have a universal impact on foreign IPO success. Instead, the value of home country institutions along with corporate governance signals are contingent upon the institutional environment in which international entrepreneurs choose to seek capital resources.     

Pro-market institutions and outward FDI of emerging market firms: An institutional arbitrage logic

We offer new theory and evidence regarding the effects of pro-market institutions on outward foreign direct investment (FDI) of emerging market firms (EMFs). Drawing on the logic of institutional arbitrage, we integrate the escapism and exploitation mechanisms of EMF internationalization into a unified theoretical context. We propose an inverted U-shaped relationship between host market-supporting institutions (MSI) and the investment scale of an EMF’s FDI project in the country, showing an escape-driven upward slope for low-to-medium MSI levels and an exploitation-driven downward slope for medium-to-high MSI levels. We supplement this main argument with two boundary conditions: the alleviating effect of home market liberalization (HML) and the strengthening effect of home government subsidies (HGS), demonstrating the coexistence and variation of pro- and anti- market institutions in an emerging market. Using information on 1,450 FDI projects conducted by 288 Chinese listed firms in 116 host countries, we obtain supportive evidence for the predicted relationships between the three institutional forces. This study enriches the literatures on institutional arbitrage and pro-market institutions with evidence from EMFs.     

Concurrent sourcing strategy of multinational firms in China: Drivers and performance implications

Concurrent sourcing is critical to multinational firms’ operations in emerging economies, such as China. Despite its prominence, research is lacking on the underlying conditions and performance implications of this strategy. We investigate the driving factors of multinational firms’ concurrent sourcing strategy and test whether concurrent sourcing outperforms other types of sourcing strategies. Our empirical findings suggest that multinational firms tend to choose concurrent sourcing under high levels of institutional regulations. Furthermore, the results show that concurrent sourcing generates better performance at high levels of uncertainties and the performance deficiency of concurrent sourcing can be mitigated when institutional regulations are high.     

Internationalization and performance: A contextual analysis of Indian firms

This paper explores the nature of the relationship between a firm's internationalization and performance (I–P) and provides interesting evidence on the moderating role of the firm's characteristics on this relationship. First, the paper investigates two modes of internationalization by firms: exports and foreign direct investment (FDI). The study anticipates the I–P relationship to be different for these two modes owing to the differences associated with market-seeking and strategic asset/resource-seeking motivations among internationalizing Indian firms. Drawing on these differing motivations, the study theorizes a positive linear I–P relationship with export intensity and a negative linear I–P relationship with FDI activity and finds strong support for the latter. Second, the study argues for the contextual nature of the I–P relationship and attempts to integrate the role of organizational characteristics such as business group affiliation, firm size, and firm age in influencing the I–P relationship. The study finds that business group affiliation and firm age positively moderate the I–P relationships, which signifies deeper institutional, resource-based, and legitimizing effects. These results are indicative of the need for greater mid-range theorizing to forge a more robust understanding of the role various organizational characteristics play in influencing the I–P relationship.     

The continuing debate on firm performance: A multilevel approach to the IT sectors of Taiwan and South Korea

In the economics and strategy fields, researchers seek to understand the antecedents of firm profitability. How and why do certain private enterprise firms develop competitive advantages in environments of rapid technological change while other firms do not? This study extends recent variance decomposition research in three ways. First, this work compares IT sectors in Taiwan and South Korea by using the Standard & Poor's Compustat® Global Vantage database. Second, this investigation tests industry and firm effects using both the multilevel approach of hierarchical linear modeling (HLM) and the conventional variance components approach (VCA). Third, this study explores the question of why there are significant profitability differences among technological firms even with similar industrial structural characteristics and leveraged resources and capabilities in the same IT industry. This study uses data from the U.S. Patent Office to estimate technological diversification at the level of firm resources for knowledge-based relatedness for the IT firms of Taiwan and South Korea. The empirical results find that firm effects have great impact on performance of the IT sectors of Taiwan and South Korea when estimated by either HLM or VCA. However, industry effects dominate firm effects on South Korea's IT sectors when the variance is estimated by HLM. From the perspective of conducting patents innovation, both of the specialized and diversified corporate strategies are matter to the development of these IT sectors, and South Korea's IT firms are more technologically diversified than those firms in Taiwan.     

A South-South perspective on emerging economy companies and institutional coevolution: An empirical study of Chinese multinationals in Africa

In this paper, we show how international tenders act as defining moments in building asymmetric coevolution-based mechanisms between Chinese multinational enterprises and local institutions in developing African countries. We used a case study methodology to explore how three Chinese multinationals – Citic, Sinopec, and Chinalco – developed non-market relations with the institutions of three African countries, namely, Algeria, Gabon and the Republic of Guinea, both during and after the submission of international tenders, to win strategic contracts and securely embed the company in question within the target host country. We found that Chinese companies not only submit tenders, but also develop multiple kinds of alliances in order to influence local institutions over the long term, transplant new business practices and standards, and expand in an unparalleled way, with host-country institutions and Chinese MNEs acting as partners in the new ecosystem. Based on our findings, we propose a model which highlights the specific mechanisms through which successful coevolution processes emerge and prosper between Chinese multinationals and developing country institutions. This study contributes to the international management literature by extending the field of institutional theory to co-evolutionism in international business.     

Antecedents of firm performance in emerging economies: Business groups,strategy, industry structure,and state support

A rich literature has investigated the antecedents of firm performance in developed economies, resulting in a consensus view that firm resources and strategy are the key determinants. Several arguments, however, suggest that in emerging economies other factors are more important for firm performance. This study analyzes the impact of firm strategy and industry structure as well as business group membership and state support on firm performance in an advanced emerging economy, Turkey. Using a data set compiled from a selection of the 1000 largest manufacturing firms in this country, the study employs several regression models to identify the main determinants of firm performance as measured by productivity and net profit margin. In contrast to studies of developed economies, the investigation finds that firm-related factors (competitive strategies) do not significantly influence performance; instead factors related to industry structure and business group membership are the strongest determinants of firm performance; further, state support interacts with business group membership and is positively related to productivity.     

Firm capability and performance in China: The moderating role of guanxi and institutional forces in domestic and foreign contexts

This study examines the moderating effects of institutional forces on the capabilities–performance link by combining the resource-base view and institutional theory. From a survey of 324 Chinese manufacturers, this study tests the impacts of the importance of guanxi (an informal institutional factor) and legal support (a formal institutional factor) on the performance advantages of firm capabilities. The results indicate that both marketing and technology capabilities relate positively to performance, but the performance advantage of technology capabilities is less prominent when guanxi is important and the legal system is ineffective. In addition, guanxi importance strengthens the performance advantage of domestic firms' marketing capabilities but reduces that of foreign firms' marketing capabilities in China.     

MNE performance during a crisis: An evolutionary perspective on the role of dynamic managerial capabilities and industry context

As the likelihood of worldwide crises increases due to globalization and the resulting economic contagion, understanding why some multinational enterprises (MNEs) prevail in such environments becomes ever more critical. Drawing from the concept of dynamic managerial capabilities, we posit that MNE in-crisis performance is associated with the pre-crisis development of asset management capabilities, or the capacity of managers to orchestrate assets so as to extract more value from the firm’s resource pool. Specifically, we argue that because dynamic managerial capabilities evolve as a response to a firm’s task environment, MNEs that operate in dynamic industries develop stronger asset management capabilities. However, we also posit that whether these capabilities contribute to in-crisis performance is contingent upon the munificence of the industry environment in which the capability evolves. Asset management capabilities that evolve in munificent environments would encompass a wider spectrum of routine-altering activities, and thus increase the ability of the MNE to react to more revolutionary events, such as global economic crises. Conversely, asset management capabilities that evolve in resource-scarce environments will result in more strategic lock-in due to firms' constrained ability to experiment with novel resource configurations, resulting in poorer in-crisis performance. We test our hypotheses using a sample of 854 MNEs in the context of the global financial crisis of 2008, and find support for our hypotheses. We discuss implications for the dynamic capabilities view and MNE resilience.     

Fast and frugal crisis management: An analysis of rule-based judgment and choice during water contamination events

Drawing on the fast and frugal research programme, this paper describes a retrospective field study of decision making during water contamination events. It characterises three heuristics employed in real-world decision making. The credibility heuristic discriminates between signals from targets and noise from distracters on the basis of the perceived trustworthiness of the message conveyor. With the precedent heuristic, the response to an unfolding event is determined by searching for past analogues (i.e. precedents) and, if found, treating the current event in the same fashion. By contrast, the facts-trump-speculation heuristic discriminates between conflicting explanations or claims according to how they rank on pre-determined hierarchies of evidence (orders of cue validities), neglecting utilities and avoiding the aggregation of competing lines of evidence. Rather than cataloguing the biases that these heuristics lead to, this paper focuses on the structural factors which shape each heuristic's ecological rationality. In doing so, the study develops ideas about how particular infrastructure systems and forms of social organisation structure the validity of cues, the accessibility of information, and the application of particular heuristics. The study also introduces the concept of safeguards to rule-based reasoning, and the idea that heuristics can be used to rationalize decisions, and deployed strategically to persuade other social actors. The over-arching claim is that the fast and frugal programme provides a powerful framework for analysing judgment and choice in organisations, and offers a bridge between psychological and political models of organisational behaviour.