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The Value of Business–Government Ties for Manufacturing Firms’ Product Innovation during Institutional Transition in China

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  • Chun Yang

    () (Faculty of Sciences, Section of Science, Business & Innovation, Vrije Universiteit Amsterdam, 1081 HV Amsterdam, The Netherlands
    Department of Public Administration, Hunan University, No. 2 Lushan Rd., Changsha 410082, China)

  • Bart Bossink

    () (Faculty of Sciences, Section of Science, Business & Innovation, Vrije Universiteit Amsterdam, 1081 HV Amsterdam, The Netherlands)

  • Peter Peverelli

    () (Amsterdam Business Research Institute, Vrije Universiteit Amsterdam, 1081 HV Amsterdam, The Netherlands)

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.

Suggested Citation

  • Chun Yang & Bart Bossink & Peter Peverelli, 2018. "The Value of Business–Government Ties for Manufacturing Firms’ Product Innovation during Institutional Transition in China," Sustainability, MDPI, Open Access Journal, vol. 11(1), pages 1-27, December.
  • Handle: RePEc:gam:jsusta:v:11:y:2018:i:1:p:63-:d:192654
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    More about this item

    Keywords

    business–government ties; institutional transition; institution-based view of business strategy; manufacturing firms’ product innovation; China;

    JEL classification:

    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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