The value of business-government ties for manufacturing firms' product innovation during institutional transition in China

Chun Yang, Bart Bossink*, Peter Peverelli

*Corresponding author for this work

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

This study investigates how firms invest in building and maintaining business- government (B-G) ties when they aim to innovate in regions where, due to institutional transitions, institutional contexts differ remarkably. Using data from the China Enterprise Survey of the World Bank, empirical findings suggest that the influence of B-G ties on Chinese firms' product innovation is different in distinctive institutional contexts in China. More specifically, during institutional transition, B-G ties become less efficient for facilitating product innovation when regional legal institutions and infrastructural supporting systems in a region are more stable, fair, and efficient. By contrast, during institutional transition, a positive effect of B-G ties on firm product innovation in a region becomes more significant when financial systems are relatively advanced. In addition to this, the value of B-G ties for firm product innovation appears to be more stable when business regulation develops within subnational regions.

Original languageEnglish
Article number63
Pages (from-to)1-27
Number of pages27
JournalSustainability (Switzerland)
Volume11
Issue number1
DOIs
Publication statusPublished - 22 Dec 2018

Bibliographical note

This article belongs to the Special Issue Transition from China-Made to China-Innovation

Keywords

  • Business-government ties
  • China
  • Institution-based view of business strategy
  • Institutional transition
  • Manufacturing firms' product innovation

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