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Subnational institutions and open innovation: evidence from China

Fei Sun (Department of Economics, Chinese Academy of Governance, Beijing, China)
Junjie Hong (School of International Trade and Economics, University of International Business and Economics, Beijing, China)
Xiuying Ma (School of Statistics, Jilin University of Finance and Economics, Changchun, China)
Chengqi Wang (School of Business Administration, Dongbei University of Finance and Economics, Dalian, China) (University of Nottingham, Nottingham, UK)

Management Decision

ISSN: 0025-1747

Article publication date: 16 October 2017

584

Abstract

Purpose

The purpose of this paper is to examine how subnational institutions within a country explain the performance consequences of open innovation (OI) in emerging market enterprises (EMEs).

Design/methodology/approach

The paper conducts a regression analysis by using a novel panel data set comprising of 438 innovative Chinese firms over the period of 2008-2011.

Findings

The authors show that although on average openness to external actors improves innovation performance this effect is pronounced for EMEs that operate in subnational regions with a higher level of intellectual property rights (IPR) enforcement and of factor market development. The findings point to the context-dependent nature of OI strategy and the complementary effect of institutional parameters in emerging markets and help to reconcile the contrasting findings regarding the effect of OI in the prior literature.

Originality/value

This paper extends the literature on OI by suggesting that the analysis of the performance consequences of OI strategy should go beyond the nexus between OI and firm performance, and instead, focus on subnational-specific institutions, such as region-specific IPR enforcement, factor market development and intermediation market development, that may facilitate or constrain the effect of OI model.

Keywords

Acknowledgements

Chengqi Wang is grateful for the financial support from the British Academy (510074), the Natural Science Foundation of China (No. 71563058) and the joint funding scheme of the Chinese Academy of Social Sciences and government of Ningbo city, China.

Citation

Sun, F., Hong, J., Ma, X. and Wang, C. (2017), "Subnational institutions and open innovation: evidence from China", Management Decision, Vol. 55 No. 9, pp. 1942-1955. https://doi.org/10.1108/MD-11-2016-0781

Publisher

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Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited

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