Hostname: page-component-848d4c4894-pftt2 Total loading time: 0 Render date: 2024-06-07T21:27:33.626Z Has data issue: false hasContentIssue false
  • English
  • Français

Formal and Informal Institutions: The Independent and Joint Impacts on Firm Innovation

Published online by Cambridge University Press:  21 September 2021

Cuifen Weng ,
Xuanye Li ,
Hongyan Yang  and
Ting Ren Open the ORCID record for Ting Ren [Opens in a new window]
Cuifen Weng
Affiliation:
Peking University, China
Xuanye Li
Affiliation:
Rutgers University, USA
Hongyan Yang
Affiliation:
Lingnan University, Hong Kong
Ting Ren*
Affiliation:
Peking University, China
*
Corresponding author: Ting Ren (renting@phbs.pku.edu.cn) The data and materials are available at <https://osf.io/nqhba/>.
Get access Rights & Permissions [Opens in a new window]

Abstract

We study the impact of formal and informal institutions perceived and experienced by firms on their innovation using the 2012 World Bank Enterprise Survey data in China. We propose a framework to identify different innovator types of firms. Our analysis shows that (1) perceived constraints from the governmental system make firms more likely to be innovators than non-innovators; (2) perceived constraints from the legal system make firms more likely to be imitators than innovators; (3) lack of formal finance makes firms more likely to be non-innovators than innovators; (4) prevalence of bribery makes firms more likely to be non-innovators than innovators but less likely to be innovation pretenders than innovators. Our study enriches institutional theory and innovation research by establishing a framework that encompasses multiple dimensions of formal and informal institutions perceived and experienced by firms and the impacts of such perception and experience on firms’ propensity to become certain type of innovator.

摘要

本文利用 2012 年世界银行在中国所得的企业调查数据，研究了公司感知和经历的正式与非正式制度对公司创新的影响，由此提出一个用于识别不同的公司创新者类型的框架。本文的分析表明： (1) 感知到来自政府制度的约束后，公司更有可能成为创新者，而不是非创新者；(2) 感知到来自法律制度的约束后，公司更有可能成为效仿者，而不是创新者；(3) 缺乏正规金融体系时，公司更有可能成为非创新者，而不是创新者；(4) 贿赂行为普遍时，公司更有可能成为非创新者，而不是创新者，但相比于成为创新者，其成为假冒创新者的可能性更低。本文建立的理论框架涵盖了公司感知和经历的正式与非正式制度的多个维度，及其如何影响公司的创新者类型，丰富了制度理论和创新研究。

Keywords

formal and informal institutionsinnovative performancenew product deploymentR&D activitiestype of innovator正式与非正式制度创新绩效新产品部署研发活动创新者类型
Type
Article
Information
Management and Organization Review , Volume 17 , Issue 5 , December 2021 , pp. 918 - 967
Copyright
Copyright © The Author(s), 2021. Published by Cambridge University Press on behalf of The International Association for Chinese Management Research

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

ACCEPTED BY Editor-in-Chief Arie Y. Lewin

References

REFERENCES

Ahlstrom, D., & Bruton, G. D. 2010. Rapid institutional shifts and the co-evolution of entrepreneurial firms in transition economies. Entrepreneurship Theory and Practice, 34(3): 531–554.CrossRefGoogle Scholar
Aidis, R., & Adachi, Y. 2007. Russia: Firm entry and survival barriers. Economic Systems, 31(4): 391–411.CrossRefGoogle Scholar
Aidis, R., Estrin, S., & Mickiewicz, T. 2008. Institutions and entrepreneurship development in Russia: A comparative perspective. Journal of Business Venturing, 23(6): 656–672.CrossRefGoogle Scholar
Ali, F. A., Fiess, N., & MacDonald, R. 2010. Do institutions matter for foreign direct investment? Open Economies Review, 21(2): 201–219.CrossRefGoogle Scholar
Ang, S. H., Benischke, M. H., & Doh, J. P. 2015. The interactions of institutions on foreign market entry mode. Strategic Management Journal, 36(10): 1536–1553.CrossRefGoogle Scholar
Audretsch, D. B., & Feldman, M. P. 1996. R&D spillovers and the geography of innovation and production. American Economic Review, 86(3): 630–640.Google Scholar
Augier, M., Guo, J., & Rowen, H. 2016. The Needham puzzle reconsidered: Organizations, organizing, and innovation in China. Management and Organization Review, 12(1): 5–24.CrossRefGoogle Scholar
Ayyagari, M., Demirgüç-Kunt, A., & Maksimovic, V. 2011. Firm innovation in emerging markets: The role of finance, governance, and competition. Journal of Financial and Quantitative Analysis, 46(6): 1545–1580.CrossRefGoogle Scholar
Baer, M., & Frese, M. 2003. Innovation is not enough: Climates for initiative and psychological safety, process innovations, and firm performance. Journal of Organizational Behavior, 24(1): 45–68.CrossRefGoogle Scholar
Barasa, L., Knoben, J., Vermeulen, P., Kimuyu, P., & Kinyanjui, B. 2017. Institutions, resources and innovation in East Africa: A firm level approach. Research Policy, 46(1): 280–291.CrossRefGoogle Scholar
Bayus, B. L., Erickson, G., & Jacobson, R. 2003. The financial rewards of new product introductions in the personal computer industry. Management Science, 49(2): 197–210.CrossRefGoogle Scholar
Beck, T., & Demirgüç-Kunt, A. 2008. Access to finance: An unfinished agenda. The World Bank Economic Review, 22(3): 383–396.CrossRefGoogle Scholar
Beck, T., & Demirgüç-Kunt, A., & Maksimovic, V. 2008. Financing patterns around the world: Are small firms different? Journal of Financial Economics, 89(3): 467–487.CrossRefGoogle Scholar
Brockman, P., Khurana, I. K., & Zhong, R. 2018. Societal trust and open innovation. Research Policy, 47(10): 2048–2065.CrossRefGoogle Scholar
Brown, J. R., Martinsson, G., & Petersen, B. C. 2012. Do financing constraints matter for R&D? European Economic Review, 56(8): 1512–1529.CrossRefGoogle Scholar
Buckley, P. J., Clegg, L. J., Cross, A. R., Liu, X., Voss, H., & Zheng, P. 2007. The determinants of Chinese outward foreign direct investment. Journal of International Business Studies, 38(4): 499–518.CrossRefGoogle Scholar
Burt, R. S., & Burzynska, K. 2017. Chinese entrepreneurs, social networks, and guanxi. Management and Organization Review, 13(2): 221–260.CrossRefGoogle Scholar
Butzbach, O., Fuller, D. B., & Schnyder, G. 2020. Manufacturing discontent: National institutions, multinational firm strategies, and anti-globalization backlash in advanced economies. Global Strategy Journal, 10(1): 67–93.CrossRefGoogle Scholar
Chadee, D., & Roxas, B. 2013. Institutional environment, innovation capacity and firm performance in Russia. Critical Perspectives on International Business, 9(1/2): 19–39.CrossRefGoogle Scholar
Chaudhry, A., & Garner, P. 2007. Do governments suppress growth? Institutions, rent-seeking, and innovation blocking in a model of Schumpeterian growth. Economics & Politics, 19(1): 35–52.CrossRefGoogle Scholar
Chen, Y.-S., Lin, M.-J. J., & Chang, C.-H. 2009. The positive effects of relationship learning and absorptive capacity on innovation performance and competitive advantage in industrial markets. Industrial Marketing Management, 38(2): 152–158.CrossRefGoogle Scholar
Cheng, M. L., & Huang, C. 2016. Transforming China's IP system to stimulate innovation. In Lewin, A. Y., Murmann, J. P., & Kenney, M. (Eds.), China's innovation challenge: Overcoming the middle-income trap:152–188. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Child, J. 2016. Building the innovation capacity of SMEs in China. In Lewin, A. Y., Murmann, J. P., & Kenney, M. (Eds.), China's innovation challenge: Overcoming the middle-income trap: 189–218. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Chiu, C.-Y., Liou, S., & Kwan, L. Y. Y. 2016. Institutional and cultural contexts of creativity and innovation in China. In Lewin, A. Y., Murmann, J. P., & Kenney, M. (Eds.), China's innovation challenge: Overcoming the middle-income trap: 368–393. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Cho, H. J., & Pucik, V. 2005. Relationship between innovativeness, quality, growth, profitability, and market value. Strategic Management Journal, 26(6): 555–575.CrossRefGoogle Scholar
Cooke, P., Gomez Uranga, M., & Etxebarria, G. 1997. Regional innovation systems: Institutional and organisational dimensions. Research Policy, 26(4): 475–491.CrossRefGoogle Scholar
Cui, L. 2016. The primacy of institutional explanation of Chinese outward FDI: Is it understated or overstated? Management and Organization Review, 12(3): 457–467.CrossRefGoogle Scholar
Cull, R., & Xu, L. C. 2003. Who gets credit? The behavior of bureaucrats and state banks in allocating credit to Chinese state-owned enterprises. Journal of Development Economics, 71(2): 533–559.CrossRefGoogle Scholar
Czarnitzki, D., Hanel, P., & Rosa, J. M. 2011. Evaluating the impact of R&D tax credits on innovation: A microeconometric study on Canadian firms. Research Policy, 40(2): 217–229.CrossRefGoogle Scholar
Dechezleprêtre, A., Einiö, E., Martin, R., Nguyen, K. T., & van Reenen, J. 2016. Do tax incentives for research increase firm innovation? An RD design for R&D. NBER Working Paper, No. W22405.Google Scholar
Doh, J. P., Rodriguez, P., Uhlenbruck, K., Collins, J., & Eden, L. 2003. Coping with corruption in foreign markets. Academy of Management Perspectives, 17(3): 114–127.CrossRefGoogle Scholar
Dong, J., & Gou, Y. N. 2010. Corporate governance structure, managerial discretion, and the R&D investment in China. International Review of Economics & Finance, 19(2): 180–188.CrossRefGoogle Scholar
Dushnitsky, G., & Shaver, J. M. 2009. Limitations to interorganizational knowledge acquisition: The paradox of corporate venture capital. Strategic Management Journal, 30(10): 1045–1064.CrossRefGoogle Scholar
Estrin, S., & Prevezer, M. 2011. The role of informal institutions in corporate governance: Brazil, Russia, India, and China compared. Asia Pacific Journal of Management, 28(1): 41–67.CrossRefGoogle Scholar
Fang, S. R., Fang, S. C., Chou, C. H., Yang, S. M., & Tsai, F. S. 2011. Relationship learning and innovation: The role of relationship-specific memory. Industrial Marketing Management, 40(5): 743–753.CrossRefGoogle Scholar
Firth, M., Lin, C., Liu, P., & Wong, S. M. 2009. Inside the black box: Bank credit allocation in China's private sector. Journal of Banking & Finance, 33(6): 1144–1155.CrossRefGoogle Scholar
Fogel, K., Hawk, A., Morck, R., & Yeung, B. 2006. Institutional obstacles to entrepreneurship. In Basu, A., Casson, M., Wadeson, N., & Yeung, B. (Eds.), Oxford handbook of entrepreneurship. Oxford: Oxford University Press.Google Scholar
Fogel, G., & Zapalska, A. 2001. A comparison of small and medium-size enterprise development in central and eastern Europe. Comparative Economic Studies, 43(3): 35–68.CrossRefGoogle Scholar
Freel., M. S. 2003. Sectoral patterns of small firm innovation, networking and proximity. Research Policy, 32(5): 751–770.CrossRefGoogle Scholar
Fu, W., Revilla Diez, J., & Schiller, D. 2013. Interactive learning, informal networks and innovation: Evidence from electronics firm survey in the Pearl River Delta, China. Research Policy, 42(3): 635–646.CrossRefGoogle Scholar
Fuller, D. B. 2016a. China's political economy: Prospects for technological innovation-based growth. In Lewin, A. Y., Murmann, J. P., & Kenney, M. (Eds.), China's innovation challenge: Overcoming the middle-income trap: 121–151. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Fuller, D. B. 2016b. Paper tigers, hidden dragons: Firms and the political economy of China's technological development. Oxford and New York: Oxford University Press.CrossRefGoogle Scholar
Gao, S., Xu, K., & Yang, J. 2008. Managerial ties, absorptive capacity, and innovation. Asia Pacific Journal of Management, 25(3): 395–412.CrossRefGoogle Scholar
García-Herrero, A., Gavilá, S., & Santabárbara, D. 2006. China's banking reform: an assessment of its evolution and possible impact. CESifo Economic Studies, 52(2): 304–363.CrossRefGoogle Scholar
Gaviria, A. 2002. Assessing the effects of corruption and crime on firm performance: Evidence from Latin America. Emerging Markets Review, 3(3): 245–268.CrossRefGoogle Scholar
Geiger, S. W., & Hoffman, J. J. 1998. The impact of the regulatory environment and corporate level diversification on firm performance. Journal of Managerial Issues, 10(4): 439–453.Google Scholar
Grabowski, H. G., Vernon, J. M., & Thomas, L. G. 1978. Estimating the effects of regulation on innovation: an international comparative analysis of the pharmaceutical industry. The Journal of Law and Economics, 21(1): 133–163.CrossRefGoogle ScholarPubMed
Hambrick, D. C., & Mason, P. A. 1984. Upper echelons: The organization as a reflection of its top managers. Academy of Management Review, 9(2): 193–206.CrossRefGoogle Scholar
Holmes, R. M., Miller, T., Hitt, M. A., & Salmador, M. P. 2011. The interrelationships among informal institutions, formal institutions, and inward foreign direct investment. Journal of Management, 39(2): 531–566.CrossRefGoogle Scholar
Horak, S., & Restel, K. 2016. A dynamic typology of informal institutions: Learning from the case of guanxi. Management and Organization Review, 12(3): 525–546.CrossRefGoogle Scholar
Hsu, J. Y., & Saxenian, A. 2000. The limits of guanxi capitalism: Transnational collaboration between Taiwan and the USA. Environment and Planning A, 32(11): 1991–2005.CrossRefGoogle Scholar
Huang, F., & Rice, J. 2012. Firm networking and bribery in China: Assessing some potential negative consequences of firm openness. Journal of Business Ethics, 107(4): 533–545.CrossRefGoogle Scholar
Hyytinen, A., & Toivanen, O. 2005. Do financial constraints hold back innovation and growth?: Evidence on the role of public policy. Research Policy, 34(9): 1385–1403.CrossRefGoogle Scholar
Jackson, G., & Deeg, R. 2008. Comparing capitalisms: Understanding institutional diversity and its implications for international business. Journal of International Business Studies, 39(4): 540–561.CrossRefGoogle Scholar
Jackson, G., & Deeg, R. 2019. Comparing capitalisms and taking institutional context seriously. Journal of International Business Studies, 50(1): 4–19.CrossRefGoogle Scholar
Jaworski, B. J., & Kohli, A. K. 1993. Market orientation: Antecedents and consequences. Journal of Marketing, 57(3): 53–70.CrossRefGoogle Scholar
Jefferson, G. H., & Rawski, T. G. 1994. How industrial reform worked in China: The role of innovation, competition, and property rights. The World Bank Economic Review, 8(suppl_1): 129–156.CrossRefGoogle Scholar
Jensen, K. W., & Schøtt, T. 2014. Firms’ innovation embedded in their networks of collaboration: China compared to the world. Journal of Chinese Economic and Business Studies, 12(3): 273–292.CrossRefGoogle Scholar
Kleinknecht, A. 1989. Firm size and innovation: Observations in Dutch manufacturing industries. Small Business Economics, 1(3): 215–222.CrossRefGoogle Scholar
Krammer, S. M. S. 2017. Greasing the wheels of change: Bribery, institutions, and new product introductions in emerging markets. Journal of Management, 45(5): 1889–1926.CrossRefGoogle Scholar
Krueger, A. O. 1974. The political economy of the rent-seeking society. American Economic Review, 64(3): 291–303.Google Scholar
Kwan, L. Y. Y., & Chiu, C. Y. 2015. Country variations in different innovation outputs: The interactive effect of institutional support and human capital. Journal of Organizational Behavior, 36(7): 1050–1070.CrossRefGoogle Scholar
Laursen, K., Masciarelli, F., & Prencipe, A. 2012. Regions matter: How localized social capital affects innovation and external knowledge acquisition. Organization Science, 23(1): 177–193.CrossRefGoogle Scholar
Levine, R., Lin, C., & Xie, W. 2018. Corporate resilience to banking crises: The roles of trust and trade credit. Journal of Financial and Quantitative Analysis, 53(4): 1441–1477.CrossRefGoogle Scholar
Lewin, A. Y., Kenney, M., & Murmann, J. P. 2016. China's innovation challenge: An introduction. In Lewin, A. Y., Murmann, J. P., & Kenney, M. (Eds.), China's innovation challenge: Overcoming the middle-income trap: 1–31. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Li, J., Chen, D., & Shapiro, D. M. 2015. Product innovations in emerging economies: The role of foreign knowledge access channels and internal efforts in Chinese firms. Management and Organization Review, 6(2): 243–266.CrossRefGoogle Scholar
Lin, C., Lin, P., & Song, F. 2010. Property rights protection and corporate R&D: Evidence from China. Journal of Development Economics, 93(1): 49–62.CrossRefGoogle Scholar
Liou, S., Kwan, L. Y. Y., & Chiu, C. Y. 2016. Historical and cultural obstacles to frame-breaking innovations in China. Management and Organization Review, 12(1): 35–39.CrossRefGoogle Scholar
Lu, Y., Tsang, E. W., & Peng, M. W. 2008. Knowledge management and innovation strategy in the Asia Pacific: Toward an institution-based view. Asia Pacific Journal of Management, 25(3): 361–374.CrossRefGoogle Scholar
Luo, Y., Huang, Y., & Wang, S. L. 2012. Guanxi and organizational performance: A meta-analysis. Management and Organization Review, 8(1): 139–172.CrossRefGoogle Scholar
Luo, Y., & Junkunc, M. 2008. How private enterprises respond to government bureaucracy in emerging economies: The effects of entrepreneurial type and governance. Strategic Entrepreneurship Journal, 2(2): 133–153.CrossRefGoogle Scholar
Luo, Y., & Wang, S. L. 2011. Emerging economy copycats: Capability, environment, and strategy. Academy of Management Perspectives, 25(2): 37–56.CrossRefGoogle Scholar
Mansfield, E. 1986. The R&D tax credit and other technology policy issues. American Economic Review, 76(2): 190–194.Google Scholar
Meyer, K. E., & Peng, M. W. 2016. Theoretical foundations of emerging economy business research. Journal of International Business Studies, 47(1): 3–22.CrossRefGoogle Scholar
Mueller, V., Rosenbusch, N., & Bausch, A. 2013. Success patterns of exploratory and exploitative innovation: A meta-analysis of the influence of institutional factors. Journal of Management, 39(6): 1606–1636.CrossRefGoogle Scholar
Nguyen, N. A., Doan, Q. H., Nguyen, N. M., & Tran-Nam, B. 2016. The impact of petty corruption on firm innovation in Vietnam. Crime , Law and Social Change, 65(4–5): 377–394.CrossRefGoogle Scholar
North, D. C. 1990. Institutions, institutional change and economic performance. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
North, D. C. 2005. Institutions and the process of economic change. Management International, 9(3): 1–7.Google Scholar
Park, S. H., & Luo, Y. 2001. Guanxi and organizational dynamics: Organizational networking in Chinese firms. Strategic Management Journal, 22(5): 455–477.CrossRefGoogle Scholar
Paunov, C. 2016. Corruption's asymmetric impacts on firm innovation. Journal of Development Economics, 118: 216–231.CrossRefGoogle Scholar
Peng, M. W., Li, S. S., Pinkham, B., & Chen, H. 2009. The institution-based view as a third leg for a strategy tripod. Academy of Management Perspectives, 23(3): 63–81.CrossRefGoogle Scholar
Peng, M. W., & Luo, Y. 2000. Managerial ties and firm performance in a transition economy: The nature of a micro-macro link. Academy of Management Journal, 43(3): 486–501.Google Scholar
Redding, G. 2016. Impact of China's invisible societal forces on its intended evolution. In Lewin, A. Y., Murmann, J. P., & Kenney, M. (Eds.), China's innovation challenge: Overcoming the middle-income trap: 56–86. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Sagrario Floro, M., & Ray, D. 1997. Vertical links between formal and informal financial institutions. Review of Development Economics, 1(1): 34–56.CrossRefGoogle Scholar
Selnes, F., & Sallis, J. 2003. Promoting relationship learning. Journal of Marketing, 67(3): 80–95.CrossRefGoogle Scholar
Shi, X., & Wu, Y. 2017. The effect of internal and external factors on innovative behaviour of Chinese manufacturing firms. China Economic Review, 46: S50–S64.CrossRefGoogle Scholar
Shinkle, G. A., & Mccann, B. T. 2014. New product deployment: The moderating influence of economic institutional context. Strategic Management Journal, 35(7): 1090–1101.CrossRefGoogle Scholar
Steidlmeier, P. 1999. Gift giving, bribery and corruption: Ethical management of business relationships in China. Journal of Business Ethics, 20(2): 121–132.CrossRefGoogle Scholar
van Waarden, F. 2001. Institutions and innovation: The legal environment of innovating firms. Organization Studies, 22(5): 765–795.CrossRefGoogle Scholar
Watkins, A., Papaioannou, T., Mugwagwa, J., & Kale, D. 2015. National innovation systems and the intermediary role of industry associations in building institutional capacities for innovation in developing countries: A critical review of the literature. Research Policy, 44(8): 1407–1418.CrossRefGoogle Scholar
Whitley, R. 2007. Business systems and organizational capabilities: The institutional structuring of competitive competences. Oxford: Oxford University Press.CrossRefGoogle Scholar
Witt, M. A., & Jackson, G. 2016. Varieties of capitalism and institutional comparative advantage: A test and reinterpretation. Journal of International Business Studies, 47: 1–29.CrossRefGoogle Scholar
World Bank & Development Research Center of the State Council P. R. C. 2013. China 2030: Building a modern, harmonious, and creative society. Washington, DC: World Bank.Google Scholar
Wu, J., Wang, C., Hong, J., Piperopoulos, P., & Zhuo, S. 2016. Internationalization and innovation performance of emerging market enterprises: The role of host-country institutional development. Journal of World Business, 51(2): 251–263.CrossRefGoogle Scholar
Xie, X., Qi, G., & Zhu, K. X. 2018. Corruption and new product innovation: Examining firms’ ethical dilemmas in transition economies. Journal of Business Ethics, 160: 107–125.CrossRefGoogle Scholar
Xie, F., Zhang, B., & Zhang, W. 2018. Trust, incomplete contracting, and corporate innovation. European Corporate Governance Institute (ECGI) – Finance Working Paper, No. 607/2019. Available from URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2982888Google Scholar
Yang, G., & Maskus, K. E. 2001. Intellectual property rights, licensing, and innovation in an endogenous product-cycle model. Journal of International Economics, 53(1): 169–187.CrossRefGoogle Scholar
Zahra, S. A., & George, G. 2002. Absorptive capacity: A review, reconceptualization, and extension. Academy of Management Review, 27(2): 185–203.CrossRefGoogle Scholar
Zhang, J., Zhao, W., & Zhang, Y. 2016. Institutional transformation and changing networking patterns in China. Management and Organization Review, 12(2): 303–331.CrossRefGoogle Scholar
Zhu, Y., Wittmann, X., & Peng, M. W. 2012. Institution-based barriers to innovation in SMEs in China. Asia Pacific Journal of Management, 29(4): 1131–1142.CrossRefGoogle Scholar