Our thanks go to Mark Shanley, Joseph Cherian, Yadong Luo, and Haisu Zhang for their insightful comments on early drafts of this paper and National Natural Science Foundation of China (No. 70772111, No. 70902067, and No. 71003054), Research Fund for the Doctoral Program of Higher Education from the Ministry of Education of China (No.20060698031), and Key Project of China Education Ministry (09JZD0030) for financial support.
Managerial Ties and Firm Innovation: Is Knowledge Creation a Missing Link?†
Article first published online: 13 OCT 2011
© 2011 Product Development & Management Association
Journal of Product Innovation Management
Volume 29, Issue 1, pages 125–143, January 2012
How to Cite
Shu, C., Page, A. L., Gao, S. and Jiang, X. (2012), Managerial Ties and Firm Innovation: Is Knowledge Creation a Missing Link?. Journal of Product Innovation Management, 29: 125–143. doi: 10.1111/j.1540-5885.2011.00883.x
- Issue published online: 16 NOV 2011
- Article first published online: 13 OCT 2011
- National Natural Science Foundation of China. Grant Numbers: 70772111, 70902067, 71003054
- Ministry of Education of China. Grant Number: 20060698031
- Key Project of China Education Ministry. Grant Number: 09JZD0030
Managerial ties, the personal networks of senior managers, have been found to be facilitators of firm performance because of their network benefits. However, social network theory suggests that managerial ties only play a “conduit” role by providing possibilities and opportunities to approach external resources. How can firms turn these possibilities and opportunities into internal knowledge assets and further transform them into firm innovation? Extant research constructs a direct mechanism for the managerial ties–firm innovation link. The research reported here, however, provides and investigates an indirect ties-innovation argument where organizational knowledge creation processes, including knowledge exchange and knowledge combination, are mediators. And managerial ties are examined through two traditional dimensions, business ties and political ties. This study employs empirical data from 270 firms in China and uses structural equation modeling techniques to reveal interesting findings. First, the results support the key argument that the influence of managerial ties on firm innovation is indirect. Second, knowledge exchange and knowledge combination are different constructs and the former positively influences the latter. More interestingly, business ties can exert a significant direct impact on both knowledge exchange and knowledge combination, while political ties can only influence knowledge exchange directly. Although both knowledge exchange and knowledge combination impact product innovation directly, only knowledge combination can directly influence process innovation. These findings indicate that the role of political ties is declining, but business ties still have substantial influence on firm innovation in transitional China. Different processes of organizational knowledge creation, such as knowledge exchange and knowledge combination, make distinct contributions to firm innovation. Product innovation, as opposed to process innovation, is more externally oriented and needs more organizational level knowledge creation activities.
This article extends the understanding of the ties–innovation link, organizational knowledge creation theory, and firm innovation in a transitional economy by providing a more complete understanding of how firms can access and internalize external resources and then transform them into product innovation and process innovation.