THESIS
2018
xi, 107 pages : illustrations ; 30 cm
Abstract
This dissertation compiles two related essays examining the innovations in an
emerging economy. Recent years have witnessed the spur of innovations in emerging
economies who are the later comers in innovations; however, the emerging economies
are still filled institutional voids. My dissertation in general asks: how might these
institutional voids affect the firm’s innovation-related activities or strategies in an
emerging economy?
Essay 1 examined how particular governance structure, the excess control rights
of largest shareholders, might affect the firm’s innovation inputs (R&D investment).
Contradictory to the conclusions of principle-to-principle agency theory that excess
control rights is always detrimental to firms, I argued that the excess control rights could
address...[
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This dissertation compiles two related essays examining the innovations in an
emerging economy. Recent years have witnessed the spur of innovations in emerging
economies who are the later comers in innovations; however, the emerging economies
are still filled institutional voids. My dissertation in general asks: how might these
institutional voids affect the firm’s innovation-related activities or strategies in an
emerging economy?
Essay 1 examined how particular governance structure, the excess control rights
of largest shareholders, might affect the firm’s innovation inputs (R&D investment).
Contradictory to the conclusions of principle-to-principle agency theory that excess
control rights is always detrimental to firms, I argued that the excess control rights could
address the founders’ concern of innovation risks and the impediments from investors,
thus promoting the innovations of entrepreneurial firms. Furthermore, the strong
governance mechanisms at different levels could mitigate the effect of excess control
rights on the innovations inputs. Using a dataset of innovative firms on Chinese growth
enterprise board, I found strong empirical supports.
Essay 2 aimed to address the question: how firms profit from innovations in an
emerging economy. Teece (1986) suggested that profiting from innovations required firms to procure the provision of complementary assets and protection on the innovations
from the both the political and economic stakeholders. In developed economies, firms
could rely on the formal contracts, laws and regulations to manage the dependence on
those stakeholders. However, it remained underexplored how firm addressed the
dependence to profit from innovation where the formal mechanism is ineffective in
emerging economies. I proposed that, an innovative firm’s emphasis on relational
strategies through entertainment (wining and dining) can manage the firm’s dependence
on both the political and economic stakeholders, securing the resource and protection
provisions, thus helping it profit from its innovations. However, in a region with well-developed
factor markets or in a region with strong enforcement of intellectual property
rights, firms were less dependent on those stakeholders, thus the role of relational
strategy was weakened. These arguments were supported by analysis of two data sets on
firms in China.
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