Institutional influence, cognition and competence of top managers and innovative firms: The case of Chinese power equipment firms

Abstract

Purpose

This paper aims to explore the relationship between the role of entrepreneurs and the innovation investment propensity of Chinese firms. This study is expected to enhance our understanding about the competence building of top management team for innovative development.

Design/methodology/approach

The analytical framework draws upon the recent theoretical progress about innovative firms, cognition and competence building of top managers. A horizontal data comparison and four longitudinal case studies of representative firms in the Chinese power equipment industry are implemented.

Findings

The cognitive backgrounds of top managers, which have a significant role in directing strategic resource allocation, are found to be influenced by institutional environments. Because the institutional environments which are under the Chinese transition impact different groups of firms in different ways, the relevant practices of these firms lead to dissimilar competence building of top managers.

Originality/value

This paper establishes a nexus of “institutional influence–cognition–resource allocation”. Such a nexus highlights the role of cognition of top managers in influencing the strategy-making of firms. So it helps in explaining the conditions for competence building in firms.

Citation

Feng, K., Shen, Q. and Zhao, S. (2014), "Institutional influence, cognition and competence of top managers and innovative firms: The case of Chinese power equipment firms", Chinese Management Studies, Vol. 8 No. 1, pp. 41-65. https://doi.org/10.1108/CMS-07-2013-0125