Internal embeddedness of business group affiliates and innovation performance: Evidence from China.

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Date: Aug. 2022
From: Technovation(Vol. 116)
Publisher: Elsevier Science Publishers
Document Type: Report; Brief article
Length: 322 words

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Abstract :

Keywords Business groups; Directorate embeddedness; Capital embeddedness; Innovation performance; Internal embeddedness Highlights * This study explores how directorate embeddedness and capital embeddedness influence the innovation performance of business group affiliates. * We find that the directorate embeddedness is positively related to the innovation performance of affiliates, while capital embeddedness has an inverted U-shaped effect on the innovation performance of affiliates. * We also find that the pyramidal control layers weakens the positive relationship between directorate embeddedness and the innovation performance of affiliates, and it also abates the inverted U-shaped relationship between capital embeddedness and innovation performance. Abstract Existing research on the relationship between internal embeddedness and the innovation performance of business group affiliates reports mixed results. We adopt embeddedness theory to identify two distinct characteristics of internal embeddedness, namely directorate embeddedness and capital embeddedness, and their respective impacts on business group affiliates' innovation performance. Based on a sample of listed affiliates in China from 2009 to 2018, our empirical results show that directorate embeddedness is positively related to the innovation performance of affiliates, whereas capital embeddedness has an inverted U-shaped effect. Furthermore, the pyramidal control layers of business groups attenuate the positive relationship between directorate embeddedness and the innovation performance of affiliates, and similar pyramidal control layers abate the inverted U-shaped relationship between capital embeddedness and innovation performance. Our findings highlight the distinctive characteristics of internal embeddedness and provide new insights into an organizational structure that drives business group affiliates' innovation performance in a key emerging market. Author Affiliation: (a) School of Business, Qingdao University, 308 Ningxia Road, Qingdao, Shandong, China (b) Research School of Management, Australian National University LF Crisp, Building 26, ACT 0200, Australia (c) Faculty of Business Administration, University of Macau, Avenida da Universidade, Taipa, Macau, China * Corresponding author. Article History: Received 21 June 2020; Revised 16 February 2022; Accepted 24 February 2022 Byline: Li Zheng [esterzheng@163.com] (a), Pengcheng Ma [pengcheng.ma@anu.edu.au] (b,*), Jacky Fok Loi Hong [fbaflh@um.edu.mo] (c)

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Gale Document Number: GALE|A710955470