Institution, strategy, and performance: A co-evolution model in transitional China

Over the last two decades, Chinese firms have grown quickly even in a complicated and conflicting institutional environment. Prior explanations focus on either government support at the institutional level, or imitation strategy at the firm level. We argue that these accounts are empirically inconclusive and theoretically insufficient in that they are unidirectional and contain a single perspective at a single level. Through a longitudinal case study of Geely Group, a leading private carmaker in China, we develop a co-evolution model of institutional environment, strategic ambidexterity, and innovation performance with a progression of positive feedback. We also propose a new managerial intentionality mechanism based on the positive feedback of innovation performance. Besides, we find that the role of government on firm growth is more complicated and dynamic than has been assumed. Overall, our co-evolution framework provides a more powerful and specific account of why transition economy firms have grown so fast.

[1]  S. Maguire.  The Co-Evolution of Technology and Discourse: A Study of Substitution Processes for the Insecticide DDT , 2004 .

[2]  Mike W. Peng,et al.  How Network Strategies and Institutional Transitions Evolve in Asia , 2005 .

[3]  A. Strauss,et al.  The discovery of grounded theory: strategies for qualitative research aldine de gruyter , 1968 .

[4]  A. Lewin,et al.  The Coevolution of Network Alliances: a Longitudinal Analysis of An International Professional Service Network , 1999 .

[5]  O. Shenkar,et al.  Copycats: How Smart Companies Use Imitation to Gain a Strategic Edge , 2010 .

[6]  Timothy N. Carroll,et al.  The Coevolution of New Organizational Forms , 1999 .

[7]  G. Hult,et al.  Strategic fit in transitional economies: The case of China’s electronics industry , 2001 .

[8]  Yuanqiong He,et al.  Government-Oriented Corporate Public Relation Strategies in Transitional China , 2008, Management and Organization Review.

[9]  Regulating decentralized state industries: China's auto industry , 2008 .

[10]  M. Hitt,et al.  Corporate Political Strategy Formulation: A Model of Approach, Participation, and Strategy Decisions , 1999 .

[11]  Sonia M. L. Wong,et al.  Developmental State and Corporate Governance in China , 2007, Management and Organization Review.

[12]  A. Lewin,et al.  Co-evolutionary Dynamics Within and Between Firms: From Evolution to Co-evolution , 2003 .

[13]  Garry D. Bruton,et al.  Private firms in China: Building legitimacy in an emerging economy , 2008 .

[14]  A. Lavnikovich,et al.  The Alibaba phenomenon , 2015 .

[15]  K. Eisenhardt.  Building theories from case study research , 1989, STUDI ORGANIZZATIVI.

[16]  Yadong Luo,et al.  An Ambidexterity Perspective Toward Multinational Enterprises From Emerging Economies , 2009 .

[17]  T. Hafsi,et al.  Institutional Determinism and Political Strategies , 2009 .

[18]  M. Zimmerman,et al.  Beyond Survival: Achieving New Venture Growth by Building Legitimacy , 2002 .

[19]  Xiaohui Lu,et al.  Managing Indefinite Boundaries: The Strategy and Structure of a Chinese Business Firm , 2005, Management and Organization Review.

[20]  Hua Wang,et al.  Innovation in product architecture—A study of the Chinese automobile industry , 2008 .

[21]  Kim B. Clark,et al.  Architectural Innovation: The Reconfiguration of Existing Product Technologies and the Failure of , 1990 .

[22]  Steven C. Currall,et al.  The Coevolution of Trust, Control, and Learning in Joint Ventures , 2004, Organ. Sci..

[23]  Wladimir M. Sachs,et al.  Coevolution of Institutions and Corporations in Emerging Economies: How the Salim Group Morphed into an Institution of Suharto's Crony Regime , 2008 .

[24]  Michael Hobday,et al.  Innovation in East Asia: The Challenge to Japan , 1996, The Journal of Asian Studies.

[25]  J. Child.  Strategic Choice in the Analysis of Action, Structure, Organizations and Environment: Retrospect and Prospect , 1997 .

[26]  Henrich R. Greve,et al.  Bigger and safer: the diffusion of competitive advantage , 2009 .

[27]  Rajiv Krishnan Kozhikode,et al.  Knowledge management and innovation strategy: The challenge for latecomers in emerging economies , 2008 .

[28]  Qiwen Lu,et al.  The organization of innovation in a transitional economy: business and government in Chinese electronic publishing , 2001 .

[29]  A. Ainamo,et al.  The Coevolution of New Organizational Forms in the Fashion Industry: a Historical and Comparative Study of France, Italy, and the United States , 1999 .

[30]  Anne S. Tsui,et al.  Contributing to Global Management Knowledge: A Case for High Quality Indigenous Research , 2004 .

[31]  Alvaro Cuervo‐Cazurra,et al.  Location Advantage: Emergent and Guided Co-Evolutions , 2013 .

[32]  D. North.  Institutions, Institutional Change and Economic Performance: Economic performance , 1990 .

[33]  Dong-Sung Cho,et al.  Latecomer Strategies: Evidence From the Semiconductor Industry in Japan and Korea , 1998 .

[34]  David L. Deephouse,et al.  An Examination of Differences between Organizational Legitimacy and Organizational Reputation , 2005 .

[35]  Kathleen M. Eisenhardt,et al.  Theory Building From Cases: Opportunities And Challenges , 2007 .

[36]  Mike W. Peng.  Institutional Transitions and Strategic Choices , 2003 .

[37]  Robert E. Hoskisson,et al.  Strategy in Emerging Economies , 2000 .

[38]  John Child,et al.  Co-Evolution in an Institutionalized Environment , 2003 .

[39]  Peter Nolan,et al.  China and the Global Business Revolution , 2001 .

[40]  Esther P. Y. Tang,et al.  Innovation strategy and performance during economic transition : evidences in Beijing, China , 2009 .

[41]  H. Volberda,et al.  Co-Evolution of Firm Capabilities and Industry Competition: Investigating the Music Industry, 1877-1997 , 2001 .

[42]  I. Cockburn,et al.  Measuring competence?: exploring firm effects in pharmaceutical research , 1994 .

[43]  Lorraine Eden,et al.  Government Corruption and the Entry Strategies of Multinationals , 2005 .

[44]  Henk W. Volberda,et al.  Beyond Adaptation-Selection Research: Organizing Self-Renewal in Co-Evolving Environments , 2003 .

[45]  R. Yin.  Case Study Research: Design and Methods , 1984 .

[46]  A. Lewin,et al.  Prolegomena on Coevolution: a Framework for Research on Strategy and New Organizational Forms , 1999 .

[47]  Dean Tjosvold,et al.  Business and government interdependence in China: Cooperative goals to develop industries and the marketplace , 2008 .

[48]  D. Xu,et al.  Linking Theory and Context: ‘Strategy Research in Emerging Economies’ after Wright et al. (2005) , 2012 .

[49]  A. Lewin,et al.  The Co-Evolution of Strategic Alliances , 1998 .

[50]  Justin Tan.  Venturing in Turbulent Water: A Historical Perspective of Economic Reform and Entrepreneurial Transformation , 2005 .

[51]  W. Scott,et al.  Institutions and Organizations. , 1995 .

[52]  Olga Suhomlinova,et al.  Toward a Model of Organizational Co-Evolution in Transition Economies , 2006 .