The Role of Government Affiliation in Explaining Firm Innovativeness and Profitability in Emerging Countries: Evidence from China

Wang, Chengqi; Kafouros, M; Yi, J; Hong, J; Ganotakis, P

Abstract

Drawing from institutional polycentrism, we advance understanding of how affiliation with different government levels influences innovativeness and profitability in emerging countries. Our framework suggests that as different government levels vary in their objectives and resources, they affect firm innovativeness vis-à-vis profitability in qualitatively different ways. The analysis of 18,430 Chinese firms shows that affiliation with higher-level governments enhances firms’ innovativeness, whereas affiliation with lower-level governments is effective for enhancing profitability. Our framework also clarifies how location-specific institutional substitution occurs, indicating that the usefulness of government affiliation for innovativeness depends on how effectively legal institutions protect intellectual property in each region.

Citation

Wang, C., Kafouros, M., Yi, J., Hong, J., & Ganotakis, P. (2020). The Role of Government Affiliation in Explaining Firm Innovativeness and Profitability in Emerging Countries: Evidence from China. Journal of World Business, 55(3), https://doi.org/10.1016/j.jwb.2019.101047

• Journal Article Type: Article
• Acceptance Date: Oct 18, 2019
• Online Publication Date: Nov 30, 2019
• Publication Date: Apr 1, 2020
• Deposit Date: Oct 28, 2019
• Publicly Available Date: May 31, 2021
• Journal: Journal of World Business
• Print ISSN: 1090-9516
• Electronic ISSN: 1090-9516
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 55
• Issue: 3
• Article Number: 101047
• DOI: https://doi.org/10.1016/j.jwb.2019.101047
• Keywords: State capitalism, government affiliation, political ties, innovation, profitability, China, emerging countries
• Public URL: https://nottingham-repository.worktribe.com/output/2977205
• Publisher URL: https://www.sciencedirect.com/science/article/pii/S1090951618309325
• Additional Information: This article is maintained by: Elsevier; Article Title: The role of government affiliation in explaining firm innovativeness and profitability in emerging countries: Evidence from China; Journal Title: Journal of World Business; CrossRef DOI link to publisher maintained version: https://doi.org/10.1016/j.jwb.2019.101047; Content Type: article; Copyright: © 2019 Elsevier Inc. All rights reserved.