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Performance aspiration, industrial search and R&D investment among chinese firms

Performance aspiration, industrial search and R&D investment among chinese firms PurposeThis paper aims to examine the behavioral determinants of firm research and development (R&D) investment in China by looking into the interaction between performance aspiration and industrial search.Design/methodology/approachThe author argues that the performance aspiration effect is strengthened in R&D-intensive industries based on the isomorphism rationale, whereas it is weakened by high industry R&D intensity owing to the differentiation rationale. Deriving from the isomorphism and differentiation rationales, the author developed a set of competitive hypotheses and empirically tested them by using a large panel data of 6,539 company-years from China for the period 2001-2003.FindingsFirst, R&D intensity is positively related to the deviation of firm performance from aspiration. Second, industry R&D intensity negatively moderates the relationship between performance aspiration and firm R&D intensity for firms performing above aspiration. Therefore, the results provide support for the differentiation rationale.Originality/valueThe study contributes to the ongoing research that provides and tests the behavioral explanations for R&D and innovation. By delving into the moderating role of industry R&D intensity, the author advocate the need for contextualizing performance aspiration in industrial environments. The study informs policymakers and business leaders about the interaction between the external environment and internal decision process in R&D investment decision. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Chinese Management Studies Emerald Publishing

Performance aspiration, industrial search and R&D investment among chinese firms

Su, Yiyi; Su, Taoyong
Chinese Management Studies , Volume 11 (2): 14 – Jun 5, 2017
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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1750-614X
DOI
10.1108/CMS-02-2017-0032
Publisher site
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Abstract

PurposeThis paper aims to examine the behavioral determinants of firm research and development (R&D) investment in China by looking into the interaction between performance aspiration and industrial search.Design/methodology/approachThe author argues that the performance aspiration effect is strengthened in R&D-intensive industries based on the isomorphism rationale, whereas it is weakened by high industry R&D intensity owing to the differentiation rationale. Deriving from the isomorphism and differentiation rationales, the author developed a set of competitive hypotheses and empirically tested them by using a large panel data of 6,539 company-years from China for the period 2001-2003.FindingsFirst, R&D intensity is positively related to the deviation of firm performance from aspiration. Second, industry R&D intensity negatively moderates the relationship between performance aspiration and firm R&D intensity for firms performing above aspiration. Therefore, the results provide support for the differentiation rationale.Originality/valueThe study contributes to the ongoing research that provides and tests the behavioral explanations for R&D and innovation. By delving into the moderating role of industry R&D intensity, the author advocate the need for contextualizing performance aspiration in industrial environments. The study informs policymakers and business leaders about the interaction between the external environment and internal decision process in R&D investment decision.

Journal

Chinese Management Studies – Emerald Publishing

Published: Jun 5, 2017

References

  • Less likely to fail? Low performance, firm size, and factory expansion in the shipbuilding industry
  • Firm resources and sustained competitive advantage
  • Localized competition and organizational failure in the manhattan hotel industry, 1989-1990
  • Dancing with strangers: aspiration performance and the search for underwriting syndicate partners
  • Organizational innovation and substandard performance: when is necessity the mother of innovation
  • On the measurement of organizational slack
  • Zhongguancun and China’s high-tech parks in transition
  • Concentration and specialization: dynamic of niche width in populations of organizations
  • Situational and institutional determinants of firms’ R&D search intensity
  • Absorptive capacity: a new perspective on learning and innovation