A causal analysis of the role of institutions and organizational proficiencies on the innovation capability of Chinese SMEs |
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| Institution: | 1. Department of Management, College of Business, Bowling Green State University, United States;2. Kate Tiedemann College of Business, University of South Florida, St Petersburg, United States;1. Rey Juan Carlos University, Faculty of Law and Social Sciences, Paseo de los Artilleros, s/n, 28032 Madrid, Spain;2. Complutense University of Madrid, Faculty of Economics and Business, Av. de Filipinas, nº 3 28003, Madrid, Spain;3. University of Pavia, Via San felice 5, 27100 PV, Italy;1. Durham University, Durham University Business School, Mill Hill Lane, Durham, DH1 3LB, UK;2. University of Northern Iowa, College of Business Administration, Cedar Falls, United States;1. Universita Cattolica del Sacro Cuore, Largo A. Gemelli, 1, 20123, Milano, Italy;2. University of Liverpool Management School, Chatham Street, Liverpool, L69 7ZH, UK;3. Leeds University Business School, University of Leeds, Leeds, LS2 9JT, UK;1. International Business and Strategy, Henley Business School, University of Reading, Whiteknights Campus, Reading, Berkshire, RG6 6AH, United Kingdom;2. Fresno Pacific University, 1717 S. Chestnut Ave., Fresno, CA, 93702, USA |
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| Abstract: | We attempt to advance the existing narrative about the role of local institutions vis-à-vis the organizational capabilities of Chinese SMEs, and the influence of such linkages on the innovation capability of these firms. Specifically, we complement recent work by investigating the impact of macro- as well as micro-level aspects of Chinese institutions (Government support; Guanxi) on the ‘Improvisation’ and ‘Learning’ capabilities of Chinese SMEs and, ultimately, these firms’ innovation capability. Our conceptual arguments are embedded in Institutional, Organizational learning, and Resource-based theories. We isolate, unpack, and discuss several inter-related, yet distinct, causal mechanisms that ultimately influence Chinese SMEs’ innovation capability development. Based on a Partial Least Squares analysis of more than 200 firms, we find empirical support for all six hypotheses which represent the above-mentioned relationships. Our findings offer insights pertaining to: (1) the relative impact of institutional versus firm-specific factors in developing organizational proficiencies, (2) the mapping of macro- and micro-level institutional effects on organizational proficiencies, and (3) the relative effect of organizational proficiencies on innovation performance. |
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| Keywords: | Institutions Guanxi Government support Learning capability Improvisation capability Innovation capability SMEs China |
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