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Environmental dynamism, innovation, and dynamic capabilities: the case of China

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  • Hao Jiao
  • Ilan Alon
  • Yu Cui
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    Abstract

    Purpose – Based on the resource-based view, creating and maintaining a long-term competitive advantage requires significant attention to developing and nurturing dynamic capabilities in emerging markets. With increasing research attention given to the dynamic capabilities view, the need to explore the building mechanism has continued to escalate. This study aims to consider environmental dynamism as a moderating variable, to build a theoretical model for innovation strategy and dynamic capabilities, and finally to summarize the building mechanism for dynamic capabilities. Design/methodology/approach – A total of 400 high-tech and knowledge intensive and other kind business firms in Yantz River Delta region in China were approached. In total, 158 responses were received, of which 110 were usable. To check for possible response bias, early and late respondents were compared and no response bias was found in the study. Findings – The empirical results find that the coefficient for innovation strategy is positive and significant for dynamic capabilities. However, it also finds that the interaction term between innovation strategy and environmental dynamism is not significant in predicting dynamic capabilities. Therefore, an innovation strategy can build and upgrade dynamic capabilities in both stable and rapidly changing environments. Originality/value – An empirical verification of the links between innovation strategy and dynamic capabilities is conducted, and the role of environmental dynamism on innovation strategy and dynamic capabilities in the context of an emerging market is also examined, which there is a lack of in the current literature. This study provides implications for both government and entrepreneurs in finding the right way to build dynamic capabilities through employing innovation strategy.

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    Bibliographic Info

    Article provided by Emerald Group Publishing in its journal Journal of Enterprising Communities: People and Places in the Global Economy.

    Volume (Year): 5 (2011)
    Issue (Month): 2 (April)
    Pages: 131-144

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    Handle: RePEc:eme:jecpps:v:4:y:2010:i:2:p:131-144

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    Related research

    Keywords: China; Competitive advantage; Entrepreneurs; Flexible organisations; Innovation;

    References

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    1. Robert A. Burgelman, 1983. "Corporate Entrepreneurship and Strategic Management: Insights from a Process Study," Management Science, INFORMS, vol. 29(12), pages 1349-1364, December.
    2. Wiklund, Johan & Shepherd, Dean, 2005. "Entrepreneurial orientation and small business performance: a configurational approach," Journal of Business Venturing, Elsevier, vol. 20(1), pages 71-91, January.
    3. David A Griffith & Michael G Harvey, 2001. "A Resource Perspective of Global Dynamic Capabilities," Journal of International Business Studies, Palgrave Macmillan, vol. 32(3), pages 597-606, September.
    4. Cepeda, Gabriel & Vera, Dusya, 2007. "Dynamic capabilities and operational capabilities: A knowledge management perspective," Journal of Business Research, Elsevier, vol. 60(5), pages 426-437, May.
    5. Andrew A. King & Christopher L. Tucci, 2002. "Incumbent Entry into New Market Niches: The Role of Experience and Managerial Choice in the Creation of Dynamic Capabilities," Management Science, INFORMS, vol. 48(2), pages 171-186, February.
    6. Luo, Yadong, 2000. "Dynamic capabilities in international expansion," Journal of World Business, Elsevier, vol. 35(4), pages 355-378, January.
    7. Caloghirou, Yiannis & Protogerou, Aimilia & Spanos, Yiannis & Papagiannakis, Lefteris, 2004. "Industry-Versus Firm-specific Effects on Performance:: Contrasting SMEs and Large-sized Firms," European Management Journal, Elsevier, vol. 22(2), pages 231-243, April.
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