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The asymmetric effects of local and global network ties on firms’ innovation performance

Lei Wang (Glorious Sun School of Business and Management Donghua University, Shanghai, China)
Jun Li (College of Forestry and Landscape Architecture, South China Agricultural University, China and School of Management, Curtin University, Australia)
Shaoqing Huang (Antai College of Economics and Management Shanghai Jiao Tong University, Shanghai, China)

Journal of Business & Industrial Marketing

ISSN: 0885-8624

Article publication date: 3 April 2018

654

Abstract

Purpose

The purpose of this paper is to develop and empirically test a theoretical framework examining how local network ties and global network ties affect firms’ innovation performance via their absorptive capacities.

Design/methodology/approach

The conceptual framework is empirically tested in a field study with multi-source data collected from a sample of 297 manufacturing firms located in four. Manufacturing clusters in the south-eastern Yangtze River Delta of China. Hypotheses were tested with the use of path analysis with maximum likelihood robust estimates through the structural equation modelling approach.

Findings

The asymmetry between local network ties (LNT) and global network ties (GNT) in terms of influences on firms’ innovation performance is confirmed by empirical tests. LNT not only significantly and positively contribute to firms’ innovation performance directly but also enhance it indirectly via absorptive capability, whereas GNT exhibit only marginal influence on innovation performance. GNT are shown to boost innovation performance (IP) only indirectly via firms’ absorptive capacities. Knowledge heterogeneity and the difference between domestic and multinational firms’ institutional environment are considered to be the main causes of the asymmetric effects.

Originality/value

While the previous literature either focused on the mediating role of firms’ knowledge absorptive capacities or investigated the effects of social networks separately, this study incorporates both mechanisms into a single analytical framework to better account for the interactions between network effects and absorptive capacities. The results challenge some previous studies positing that GNT are stronger determinants than LNT in shaping a local firm’s innovation capacity in emerging economies, and the findings emphasize the importance of absorptive capacity in helping local enterprises to leverage external linkages to enhance firm’s innovation performance.

Keywords

Acknowledgements

We acknowledge the funding support by National Natural Science Foundation of China (No. 71572032), and Donghua University Distinguished Young Professor Program (B201315).

Citation

Wang, L., Li, J. and Huang, S. (2018), "The asymmetric effects of local and global network ties on firms’ innovation performance", Journal of Business & Industrial Marketing, Vol. 33 No. 3, pp. 377-389. https://doi.org/10.1108/JBIM-10-2016-0252

Publisher

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Emerald Publishing Limited

Copyright © 2018, Emerald Publishing Limited

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