Study Of The Relationship Between Institutional Environment And Firm Innovation Performance In Chinese Context

Nowadays,the dynamic environment of economic globalization and rapid technological progress makes innovation the key to achieve competitive advantages and growth for firms.How to improve innovation performance is the hot topic for many scholars and practitioners.With the development of transitional economies,institutional theory becomes highly regarded as one of the pillar theories explaining firm strategies and performance.A large number of studies have shown that institutional environment has an important influence on firm's innovation activities and performance.In addition to the industry characteristics and resource conditions,the difference of innovation performance is largely dependent on the quality of institutional environment.However,it's a big difficult problem to make clear the functional mechanism of institutional environment on innovation performance.As the biggest transition economy,China is going through transition from the planned economy system to market economic system,which leads to a binary institutional structure.For one thing,the continuously improvement of rule-based,impersonal exchange regime inspires entrepreneurship,and drives firms to choose a market-centered strategy or entrepreneurial orientation strategy.For another,the massive vacancy of formal system,the residues of planned economic system and traditional culture make the informal institution still play an important role,prompting enterprises to choose a network-centered strategy.Because of different strategies,firms have various performance sources and results.Based on institutional theory,institutional environment affects firm's strategic choices by incentive mechanisms and legitimacy constraints firstly,and then results in corresponding performance,which suggests that institutional environment's impacts on firm innovation performance should get through appropriate strategies.However,the reality is that the strategic choice is difficult to only use the existing institutional theory to explain well.How to explain strategic differences in the same institutional environment? What extent and how can firms choose strategic variables freely? What's the mode of strategic choice for firms in the binary institutional environment? This study holds that there must be some moderate mechanisms between institutional environment and strategic choice.We propose that one way to solve above debates is to integrate institutional theory and upper echelon perspective by introducing corporate entrepreneurship as the mediator and entrepreneur traits as moderators to explore the internal mechanism.This study suggests that institutional environment has an impact on firm innovation performance through the choice and implementation of corporate entrepreneurship.The better quality of the entrepreneurial institutional environment is,including regulatory,cognitive and normative components,the higher entrepreneurship and innovation performance gain.Meanwhile,the relationship between institutional environment and corporate entrepreneurship is dependent on entrepreneur traits.If the entrepreneur is more narcissistic,his cognition of entrepreneurial institutional environment is more optimistic and his response is more positively,and he prefers to take corporate entrepreneurial strategy.If the entrepreneur only has work experience in domestic enterprise,his perceptions of entrepreneurial institutional environment is more likely to be driven by the traditional relationalism,which leads to lower entrepreneurship.Moreover,entrepreneur's narcissism and working experience can moderate the mediation of corporate entrepreneurship between institutional environment and innovation performance.In order to demonstrate above viewpoints,this study surveys a sample of 390 firms located in Beijing,Fujian,Chongqing,Jilin,Shanxi,and Gansu six areas,which are both non state-owned and new high-tech enterprises.Based on good reliabilities,validities,and weak common method variance,and through a series of empirical analyses,including correlation analyses,stepwise regression methods,hierarchical regression methods,Sobel tests and the Bootstrap methods,the results show that institutional environment has a significant positive influence on firm innovation performance;Corporate entrepreneurship plays a mediating role between institutional environment and innovation performance;Entrepreneur's narcissism and work experience moderate the relationship between institutional environment and entrepreneurial orientation,and the mediating effect of corporate entrepreneurship positively.Therefore,all hypotheses are supported.Based on theoretical reasoning and empirical tests,this study concludes: in the affecting process of institutional environment on firm innovation performance,corporate entrepreneurship plays the mediating role,and entrepreneur's narcissism and work experience moderate the relationship between institutional environment and corporate entrepreneurship and the mediating role of corporate entrepreneurship.Thus,with introducing corporate entrepreneurship,entrepreneur's narcissism and work experience three variables,this study has made some achievements in explaining the mechanism of institutional environment.These results have important theoretical and practical implications.First of all,this paper is a beneficial exploration to explain the mechanism of entrepreneurial institutional environment's influence on innovation performance through the induction of corporate entrepreneurship as a mediator,and entrepreneur's narcissism and work experience as moderators,which inspires further studies to explore more mediators and moderators.Secondly,this paper reveals the black-box of institutional environment's role on strategic behaviors to some extent by integrating institutional theory,managerial cognition and upper echelon perspectives,and suggests that the integration of theories can provide solutions for many strategic issues.Thirdly,considering institutional environment and entrepreneur characteristics as important contexts in China's transition economy is a beneficial attempt for contextualized studies.In China,the institutional environment is a binary structure characterized by relationship-based and rule-based,therefore,only from the perspectives of institution and top managers can we explain firms' strategic issues and performance variances effectively.Finally,this study suggests firms should fully consider entrepreneurial institutional environment and top managers' influences and understand the internal mechanism of institutional environment in order to improve innovation performance.Moreover,firms can make use of corporate entrepreneurship as a legitimacy and effective path to achieve competitive advantages persistently.However,this study also has certain limitations.With respect to research methods,further research can expand the sample,develop scales based on the Chinese context,and carry on longitudinal studies and so on.About the development of theories,we should expand the exploration of internal functional mechanism of institutional environment on firm's strategies and performance,search more entrepreneur traits which have significant impacts on the mechanism of institutional environment,apply institutional theory to other management issues in Chinese context,and explore the influence of institutional change on firm behaviors and performance.