Institutional Transitions, Informal Interorganizational Ties And Enterprise Technological Innovation

Since China's reform and opening-up, it impresses the world that the GDP has realized a rapid growth for thirty years, but the pattern of economic growth puts on rough characteristics, and the development of regional economy protrudes unbalanced increasingly, which should restrict the further development of market economy and the process of the economic reform. Enterprise technological innovation (ETI) is the critical factor for enhancing firm survival and success, reducing the differences of regional economy growth and changing the mode of macro economy growth, so it contributes a lot to the China's reform and future development. Reviewing the existing researches on ETI, it is easy to find that the internal factors and mechanisms influencing ETI are comprehensive, but researches on the external factors and mechanisms are still insufficient and need to improve. So far, scholars focus more on the effects of inter-firm networks or enterprise alliance based on contracts on ETI, and ignores the effects of informal interorganizational ties based on guanxi in China's transitions. Besides, previous studies mainly concentrate on the influence factors of ETI in vested social structure and institutional environment, but neglect the effect from the dual institutional structure constructed by planned economy and market economy under transitional economy. This dissertation will synthesize the new institutionalism, the new economic sociology and the evolutionary economy to investigate the effects and mechanisms of informal interorganizational ties based on guanxi on the ETI as well as the moderating effect of dual institutional structure in this process, so as to make up the deficiency of relevant researches, enrich the connotation of new institutionalism, the new economic sociology and the evolutionary economy in China's transitional background, and provide suggestions on how to cultivate the innovation capabilities of northeast area as well as how to propel the industrial innovations of coastal areas of southeastern China.In China's transitional economy, guanxi originated from traditional Confucian culture plays an important role on regulating resources allocation and maintaining social order. As the attribute value of guanxi rises from individual level to organizational level, the informal interorganizational ties based on guanxi have become the key to firm survival and success. Generally speaking, the informal interorganizational ties mainly include government ties (business-to-government relations) and business ties (business-to-business relations) (Peng and Zhou, 2005). Large studies argue that the close government ties and business ties not only constrain the organizational behaviors and choices, but also can improve the resources exchange and decrease the transaction cost, thus constituting the informal institutional environments that organizations embedded in. Compared to contractual relations between organizations, informal interorganizational ties based on guanxi embed in social preface-structure and special trust structure, whose value mainly depends on the closeness of ties. This means that there are strong limitations on the formation and development of informal interorganizational ties, which makes it hard to support the enlarging market transactions, and eventually been taken place by contractual relations. Peng takes the guanxi and contractual relation respectively as the main body of social structure in early phase and late phase of institutional transitions, thus constructs the two-phase model of institutional transitions and interorganizational ties change (Peng, 2003). On this basis, this dissertation further divides the early phase regulated by guanxi into initial phase regulated by government ties and intermediate phase regulated by business ties, and focuses on the important role of different informal interorganizational ties play on coordinating market transactions and the evolutionary mechanism of informal interorganizational ties, so as to integrate the interorganizational ties of different type and nature of into the process of China's institutional transitions, thus forming the basic analysis framework of this dissertation.Under the basic analysis framework, we further discuss the effect and mechanism of informal interorganizational ties on the choice and implementation of ETI in the initial phase and intermediate phase, and propose research hypotheses accordingly. Additionally, this dissertation constructs a theoretical model on evolution of informal interorganizational ties and ETI under changing environments, so as to develop the comparative static analysis framework into an evolutionary framework. The conclusion of the model goes that, in enterprise's evolutionary process, risks from path dependence and innovational activity badly constrains enterprise's innovation choices, and the co-evolution of formal institution and social culture can significantly reduce the risks, thus conducive to facilitating massive innovations and institutional transitions. To be specific, in the transition from initial phase to intermediate phase, formal institution should improve the social cognition originated from traditional culture and encourage the underlying relations between enterprises to be capitalized; while in the transition from early phase to late phase, formal institutions should change the preface-structure originated from traditional culture that constrains massive exploratory innovations and contribute to expand institutional trust. As China's economic reform advances, formal institutions will continue to establish and perfect, the proportion of market economy in the dual institutional structure will increase, and the proportion of planned economy goes down. As a result, the regulating functions and institutional attributes of guanxi tend to weaken, and then the effects of informal interorganizational ties will be moderated. Focusing on reality, there are significant differences both in the regional marketization and formal institutional structure, which will enhance or weaken the closeness of informal interorganizational ties in different areas to some extents, and thus the effect of informal interorganizational ties will be moderated. Consequently, the formal institutional structure should be considered in the analysis framework of informal interorganizational ties and ETI. This dissertation investigates and examines the moderating effect of dual institutional structure on informal interorganizational ties and ETI under the three-phase model of institutional transitions and evolution of informal interorganizational ties.Empirical research selects 252 listed companies in machinery and electronic industry as the sample to examine the relationship between the closeness of informal interorganizational ties and the ETI. The results shows that the closeness of government ties negatively correlates with the choice and implementation of ETI, while the closeness of business ties is inverse U-shaped with the choice of ETI and positively correlates with the implementation of ETI, which means the close business ties can enhance the choice and implementation of ETI, but will turn to hinder the choice of ETI after the closeness of the ties come to certain extent. The above results have confirmed the research hypotheses, but unfortunately, the results from machinery industry are undesirable, which indicates that the theoretical analysis framework still needs to improve. Based on this, we further examine the moderating effect of dual institutional structure on informal interorganizational ties and ETI. The results of empirical research show that the dual institutional structure constructed by planned economy and market economy can moderate the effect of informal interorganizational ties on ETI. Specifically, as the marketization increases and the government intervention decreases, the negative effects of close government ties on the choice and implementation of ETI will weaken, while the positive effects of close business ties on the choice and implementation of ETI will strengthen, and after the closeness of ties reach a certain extent, the negative effects of close business ties on the choice of ETI will be weak. These results confirm the research hypothesis proposed in theoretical analysis.To sum up, we can conclude that, in the initial phase of institutional transitions, the extent of government intervention is much higher, and the government ties replace formal institutions to control and coordinate the transactions. Overall, there is a significantly negative correlation between the closeness of government ties and the choice and implementation of ETI. With the increase of marketization and decrease of government intervention, the negative effects of close government ties on the choice and implementation of ETI will weaken. Meanwhile, the change of formal institution will promote the evolution of social structure and the diffusion of social trust, so as to reduce the lock-in and innovative risks of ETI and encourage the underlying relations between enterprises to be capitalized, thus inducing massive ETI and the institutional transitions move into intermediate phase. In the intermediate phase of institutional transitions, the extent of government intervention decreases significantly, but the market economy is still not dominant in the dual institutional structure, and the business ties replace government ties to regulate the transactions. Overall, the closeness of business ties is inverse U-shaped with the choice of ETI and positively correlates with the implementation of ETI. With the further increase of marketization and decrease of government intervention, the positive effects of close business ties on the choice and implementation of ETI will strengthen, and after the closeness of ties reaches a certain extent, the negative effects of close business ties on the choice of ETI tend to be weak. At the same time, the change of formal institution will promote the innovation of social culture and the collapse of special trust structure, so as to reduce the lock-in and innovative risks of ETI and result in the collapse of social preface-structure and the establishment of general trust. This will promote the extensive ETI, and the institutional transitions finally move into the late phase dominated by rules.