How middle managers’ participation in decision-making influences firm innovation performance: Evidence from China Employer–Employee Survey Data

This paper aims to re-examine the effect of middle managers’ participation in decision-making (DM) on the innovation performance of Chinese manufacturing firms. It also testifies the intermediation channels regarding how middle managers’ participation influences firm innovation performance by testing the mediating effect.

This paper constructs a model that determines firm innovation and tests the hypotheses with econometric regressions using first-hand data from the China Employer–Employee Survey. Semiparametric and intersectional regressions are used to show how middle managers’ participation in DM influences Chinese firm innovation after controlling for the characteristics of middle manager personnel, entrepreneurs, frontline workers, firm, industry and country.

This paper empirically shows that middle managers’ participation in DM has a significantly positive effect on firm innovation. After testing the mediating effect, the findings show that the improvement of middle managers’ DM participation leads to a certain increase in technicians and a reduced dependence on government. In this regard, middle managers’ participation is complementary to the human capital of entrepreneurs.

This paper measures the degree of middle managers’ participation in DM according to four indicators. It focuses on the influence mechanisms of middle managers’ participation in DM on firm innovation performance, based on their ability to allocate external and internal resources. These findings will be useful for investigating management resource reallocation within firms for developing countries.