Towards a Guanxi‐based theory of internationalization: Chinese, Taiwanese and evolving MNEs

Manufacturing strategy, organizational slack, and the formation of interfirm linkages

Purpose

This study aims to examine what types of interfirm linkages a firm enters in relation to its manufacturing strategy. The authors further aim to determine whether heterogeneous resources have different moderating effects on the relationship between a firm’s manufacturing strategy and interfirm linkages.

Design/methodology/approach

The sample consists of survey and archival data on 80 publicly listed electronics firms from the semiconductor and optoelectronics industries in Taiwan. Because the dependent variable, interfirm linkage, is a binary term, the authors apply logistic regression in our study.

Findings

This paper provides empirical insight into how a firm’s manufacturing strategy affects its probability to engage in specific types of interfirm linkages. The authors find that when a firm pursues an efficiency (flexibility) strategy, it will tend to engage in marketing (technical) interfirm linkages. In addition, absorbed slack strengthens the fit between manufacturing strategy and interfirm linkage type more than unabsorbed slack does.

Research limitations/implications

Because the sample is drawn from the Taiwanese semiconductor and optoelectronic industries, the authors encourage scholars to examine the generalizability of the findings. Future studies can furthermore adopt in-depth interviews to facilitate a better understanding of decision-makers’ considerations when entering interfirm linkages.

Originality/value

This study extends resource dependence theory across a firm’s boundary and applies the resource-based view to resource heterogeneity. The findings advance the understanding of the relationships between strategic orientation, slack resources and interfirm linkage choices. The authors show that it is important that firms consider strategic fit when they create linkages outside their existing boundaries.

Impacts of informal networks on innovation performance: evidence in Shanghai

Purpose

– This paper aims to present an empirical study on how informal networks affect innovation performance of firms in Shanghai. This study is a preliminary attempt to understand the effect of informal networks on innovation performance. Shanghai is selected as the region for data acquisition due to a prominent economic role in China. It is specifically to answer the research question regarding the impact of Chinese informal social network on innovation performance (in Shanghai).

Design/methodology/approach

– This paper attempts to explore the quantitative effect of informal networks on innovation performance in regard to group behavioural characteristics among executives in China.

Findings

– A total of 1,000 executives were invited, and there were 315 valid samples returned. Significant correlations are noted in key network variables against innovation performance. The results and findings generally support the hypotheses that “Education”, “Business Referral” and “Experience” are three core constructs exerting substantial influence in innovation performance. However, it is interesting to note that the connectivity and size of informal networks do not matter. Informal networks show no significant influence on innovation performance.

Practical implications

– This indicates stereotypes in Shanghai social business networks prioritizing on highly educated acquaintances, referral activities and working experiences.

Originality/value

– This study explores uncovered territory in organization innovation regarding the infiltration of informal networks, particularly in Chinese communities. Though the research context is Shanghai, the effect of informal networks on innovation performance can be extrapolated to other Chinese societies, such as Taiwan and Hong Kong.

Political connections, entry barriers, and firm performance

Purpose

– The purpose of this paper is to propose, by drawing on the resource-based view (RBV) and economic regulation theory, that companies with political connections are more likely to enter into industries with high entry barriers, as they are more likely to obtain entry permits from the government and can gain more benefits after entering these industries. Managers’ political connections are a crucial determinant of firm scope. Although the existing research on this topic has shown that firms tend to use political connections to increase their scope, it remains unclear which industries companies with political connections choose to enter. Drawing on the resource-based view and economic regulation theory, we propose that companies with political connections are more likely to enter into industries with high entry barriers, as they are more likely to obtain entry permits from the government and can gain more benefits after entering these industries.

Design/methodology/approach

– Data on a sample of Chinese listed privately owned enterprises were used and the findings support the main predictions.

Findings

– The findings support the main predictions.

Originality/value

– The research findings of this study contribute to the existing research on political connections and strategic choices.