Opportunism, Identification Asymmetry, and Firm Performance in Chinese Interorganizational relationships
Lucy Sojung Lee and Weiguo Zhong
Abstract:Extant literature focuses on within-dyad opportunism (i.e., transgression of the norms of a specific business relationship) while neglecting pro-relational opportunism (i.e., transgression of societal norms to benefit the relationship), resulting in limited understanding of their different effects. We argue that opportunism is a significant threat to the identity of business partners and boundary spanners which results in different relational dynamics at different levels, that is, Type-I (i.e., interorganizational identification squeezing out interpersonal identification) and Type-II identification asymmetry (i.e., interpersonal identification dominating interorganizational identification). Identification asymmetry further mediates the effects of opportunism on exchange performance. Based on a matched manufacturer–supplier sample, we find strong support to the hypotheses. Moreover, distributive fairness aggravates the effect of pro-relational opportunism on identification asymmetry, while interactive fairness mitigates it. Our research provides more nuanced between-level findings on identification in interorganizational settings, and cautions against firms’ tendency toward Machiavellian reasoning when they face the temptation of complicit behavior for organizational gains.
Accepted by: Senior Editor Peter Ping Li
Joint Effects of Ownership and Competition on the Relationship between Innovation and Productivity: Application of the CDM Model to the Chinese Manufacturing Sector
Junguo Shi, Bert Sadowski, Sihan Li, and Onder Nomaler
Abstract: On the basis of a rich panel data set of large- and medium-sized Chinese manufacturing enterprises, we observe that different types of firms (i.e. state-owned enterprises [SOEs], foreign-funded ownership [FFO] of firms, Hong Kong-Macau-Taiwanese [HMT] companies and privately-owned firms) exploit different stages of the innovation – productivity chain depending on the extent of market concentration. By applying a modified CDM model, this study reveals that SOEs tend to be more active in making innovative decisions and pursuing innovative investments but are less efficient in terms of innovation output and labour productivity, whereas FFO firms have relatively high labour productivity but are less active in the first three stages of the innovation – productivity chain. Market competition favours SOEs in the production of additional innovation products. Foreign firms are efficient in labour productivity if they are operating in a concentrated market. By using the metaphor of DNA, this study explains the heterogeneity among these different forms of ownership and generates several managerial implications.
Accepted by: Senior Editor Jiangyong Lu
Exploring Firm-Level Antecedents that Drive Motives of Internationalization: A Study of Knowledge Intensive Indian Firms
Faisal M. Ahsan, Ashutosh Sinha, and R Srinivasan
Abstract: We study firm level antecedents that drive different motives of internationalization of emerging economy firms. Based on firm’s resource based considerations of asset exploitation versus asset augmentation and locational advantages of host countries, we provide a framework to classify the motives of internationalization of emerging economy firms belonging to knowledge intensive industries. Motives of internationalization have been classified into three broad categories – market-seeking, opportunity-seeking, and strategic asset-seeking. We determine motives behind different modes of internationalization – alliances, acquisitions and greenfield ventures. Drawing upon the adaptability, amalgamation and ambidexterity (AAA) advantages from the springboard perspective, we find that firm characteristics like R&D investments, availability of financial slack, firm’s ownership structure and family control shape up its motive of internationalization.
Accepted by: Senior Editor Lin Cui
The Three Graces of Leadership: Untangling the Relative Importance and the Mediating Mechanisms of Three Leadership Styles in Russia
Alexei Koveshnikov, Mats Ehrnrooth, and Heidi Wechtler
Abstract: Drawing on the job-demand resource theory, the paper examines the relative importance and the complementarity of three widely practiced leadership styles – transformational, paternalistic and authoritarian. It investigates how the three styles relate to followers’ work engagement amongst employees in Russian domestic organizations. It also theorizes and tests the mediating effects of three psychological mechanisms, namely self-efficacy, self-esteem, and job control, on the examined relationships. The findings show that all three leadership styles relate to followers’ work engagement positively. The relationship of transformational leadership is dominant and mediated by all three psychological mechanisms. The remaining two styles also make their unique contributions to followers’ work engagement. Whereas authoritarian leadership influences followers by enhancing their self-efficacy and self-esteem, paternalistic leadership operates more extrinsically by increasing followers’ job control. Surprisingly, our analyses found that the role of control variables such as gender, age, and hierarchical position were insignificant in predicting how the three leadership styles influence employee work engagement. The study is among the first to shed light on the relative importance of the three focal leadership styles, their differential influences and interrelations, and the different mechanisms through which they relate to followers’ work engagement.
Accepted by: Senior Editor Maral Muratbekova-Touron
Firm Growth Performance and Relative Innovation Orientation of Exploration vs Exploitation: Moderating Effects of Cluster Relationships
Zhendong Li, Marina Yue Zhang, and Huiying Zhang
Abstract: This article studies the latent mechanisms underlying the non-linear correlation between a firm’s relative innovation orientation of exploration versus exploitation and performance. We also investigate the moderating effects of cluster relationships on this relationship. Using a sample of 638 SMEs in four industry clusters in Tianjin, China, we confirm an inverted U-shaped correlation between a firm’s relative innovation orientation and performance, and explicate the latent mechanisms underlying such an inverted U shape. We find that the number and strength of a firm’s cluster relationships can moderate this inverted U-shaped curve: the former moves the turning point of the inverted U shape toward exploratory orientation, and the latter moves the turning point toward exploitative orientation. For improved performance, we discuss appropriate innovation balancing strategies for cluster firms with different cluster relationships, and optimal cluster strategies under different innovation-balancing conditions. This study adds to the increasing scholarly effort on latent mechanisms behind U-shaped relationships and moderating effects on such relationships in management research.
Accepted by: Senior Editor Can Huang
The Role of Informal Social Networks as Intermediaries in the Foreign Markets
Marina Apaydin, Jon Thornberry, and Yusuf M. Sidani
Abstract: We investigate how informal social networks can assist multinational firms in their internationalization strategy. We propose a refinement of the Uppsala internalization model (Johanson & Vahne, 2009) grounded in the network theory, by developing an intermediate position between an ‘insider’ and an ‘outsider’ for conditions when the transformation of an outsider into an insider is limited by institutional constraints. An intermediary position represents one of the sides of ‘patron-client’ informal networks (Denoeux, 1993) whereby the other side is represented by the ‘insider.’ We argue that this setup would help mitigate the Liability of Outsidership (Johanson & Vahne, 2009), a replacement of the Liability of Foreignness (Hymer, 1976; Zaheer, 1995), in a modern networked business world. We contextualize our proposition for the case of Iran, a large rising Asian economy with known institutional limitations, and suggest that the informal network of local merchants (bazaaries) could play an important intermediary role in Multinational Enterprises (MNE) internationalization process. We review the history of the bazaaries and make a series of propositions exemplifying possible ways the informal networks could influence the internationalization process. In addition to re-affirming the importance of the MNE country of origin (emerging markets, and low psychic distance with Iran), we propose that an intermediary of the Iranian bazaaries will have a positive impact on performance and survival of the MNE’s subsidiary in Iran, especially in the case of incongruence of MNE’s leadership with Shi’a Islam. Additionally, we suggest that employing the Iranian diaspora may also improve subsidiary performance and survival.
Accepted by: Senior Editor Maral Muratbekova-Touron
Influence of Informal Relationships on Expatriate Career Performance in China: The Moderating Role of Cultural Intelligence
Alfred Presbitero, Shuang Ren, and Doren Chadee
Abstract: Pursuing an international career in China can be risky particularly when there is a lack of informal relationships and knowledge of the socio-cultural environment of the country. Drawing from social capital theory of career success and intelligence theory, this study investigates the influence of expatriate manager-local subordinate guanxi on expatriate managers’ career performance and the contingency role of cultural intelligence. Using multi-source data from a sample (N=154) of expatriate managers in China, our results show that expatriate manager-local subordinate guanxi positively influences expatriate career performance, and that this relationship is positively moderated by expatriates’ cultural intelligence. The broader theoretical and practical implications of the findings for international careers are fully discussed.
Accepted by: Senior Editor Yanjie Bian
The State-Owned Enterprise as an Identity: The Influence of Institutional Logics on Guanxi Behavior
Abstract: Previous research has debated whether guanxi persists or declines with the development of formal institutions. This study addresses this debate by investigating how the development of formal institutions in China’s state-owned organizations influences employees’ guanxi behavior. Building on institutional logics theory, I propose that guanxi behavior is a reaction to the socialist institutions adopted by state-owned enterprises (SOEs) and is associated with the collective identity of SOE. Thus, employees’ identification with SOEs is the mechanism that influences their guanxi behavior. A survey of 721 employees from 12 organizations compared guanxi behavior across three types of organizations with different degrees of state ownership: SOEs, public firms, and joint ventures. The results showed that the employees of joint ventures identify less with SOEs and engage in less guanxi behaviors than do SOE employees. The employees of public firms still identify with SOEs, and their guanxi behavior did not differ from that of SOE employees. Therefore, the development of formal institutions does not necessarily decrease guanxi behavior, and its effect depends on whether the collective identity underlying guanxi is changed. This study has important implications for guanxi research, institutional logics theory, and transition economies.
Accepted by: Guest Editor Sven Horak
Wasta: Advancing a Holistic Model to Bridge the Micro-Macro Divide
Sa’ad Ali and David Weir
Abstract: This paper offers a synthesis of understandings of Wasta, seen as a form of social network prevalent in the Arab Middle East. Whilst there has been increasing interest in this practice, research remains fragmented and has been criticised for its limited theoretical rigor. To address this issue, a systematic review of peer-reviewed journal articles exploring Wasta published between 1993 and 2019 was conducted. The authors analysed the identified papers according to the theoretical lens from which Wasta was viewed, creating a bridge between a theoretical focus on the macro aspect of Wasta and an alternative focus on its micro aspects, leading to the development of a holistic model of Wasta. The model also helps us to understand the complexity of Wasta, both as the network itself and as the social ties that exist among its members, and sheds light on the complex nature of the role and interactions of the Waseet. The findings respond to calls for more holistic and inclusive research to inform social networks research and bridge the micro–macro divide. The paper offers recommendations to future researchers to build on the holistic and emic approach to Wasta research adopted here.
Accepted by: Guest Editor Fida Afiouni
Interbank Relations, Environmental Uncertainty, and Corporate Credit Access in China
Katarzyna Burzynska and Sonja Opper
Abstract: We hypothesize that informal bank networks influence corporate credit access in China. Our sample comprises a panel of 515 corporations listed on China’s stock exchanges with a total of 1,052 firm-year observations, holding a total of 7,009 major bank loans from 183 distinct banks between 2007 and 2012. Results support the hypothesis that closure in bank networks facilitates credit access. We further show that the positive closure-performance association offers fewer advantages if financial markets and the legal infrastructure are relatively well developed. Our findings contribute to an emergent literature examining how informal networks can productively substitute weak formal institutions, and how the interplay between informal networks and network embeddedness shapes individual and corporate strategies.
Accepted by: Senior Editor Yanjie Bian
Director Networks, Political Connections and Earnings Quality in Malaysia
Effiezal Aswadi Abdul Wahab, Mohd Faizal Jamaludin, Dian Agustia, and Iman Harymawan
Abstract: This paper investigates the relationship between director networks and earnings quality in Malaysia. Using data on 4,416 individual directors who served on the boards of 745 firms listed on Bursa Malaysia during 2011, we map the entire network of directors and generate measures to reflect the size and quality of information within the network. We find a negative and significant relationship between the overall connectedness of a director’s network and the firm’s earnings quality. In addition, we find a negative and significant relationship between the political connectedness of the director’s network and earnings quality. Our results are robust for different measures of earnings quality.
Accepted by: Senior Editor Maral Muratbekova-Touron