Network Embeddedness, Corporate Entrepreneurship and Firm Performance
|Keywords||corporate entrepreneurship network embeddedness relational embededdness structural embededdness industrial cluster cluster upgrading performance|
Over the last couple of decades, industrial cluster (IC) has been an important topic in such research fields as regional economics, economic geography, business administration, etc. The development of IC has captured attentions of regional economists, economic geographers, management scholars and a wide range of government officials. Being an advantageous form of industrial organization, ICs have played pivotal roles in China’s economic growth ever since the implementation of reform and opening-up policy in 1970s. However, due to limited technology and marketing capability, ICs in China devote their efforts to manufacturing and production of low value-added or labor-intensive products and thus fall within low-end part of the international value chain. With the arising of ICs from other developing countries, ICs in China are facing increasingly fiercer competitions. As such, it is imperative for ICs in China to restructure and upgrade. The ongoing global financial crisis, originated from U.S. subprime mortgage crisis in 2007, further urges China to upgrade its ICs.Previous research primarily addresses the upgrading issue at the IC-level, and offers valuable suggestions for the healthy development of ICs in China. However, prior research paid scant attentions to frame and answer the same question at the firm-level. We propose that, in order to lay the micro-foundation for cluster upgrading, the upgrading phenomena should be examined at the firm-level. In this dissertation, we take corporate entrepreneurship (CE), namely, the entrepreneurial activities engaged in by incumbent firms, as a device to upgrade clustered firms or even cluster as a whole, and examine the effects of CE on clustered firm’s upgrading and performance improvement. We also explore the antecedents of CE from the perspective of network embeddedness. In order to measure CE activities appropriately, we develop a CE scale for clustered firms. Overall, this dissertation examines the antecedents and consequences of CE within the context of IC and consists of four studies which follow their respective theoretical lens.Following the scale development procedure suggested by Churchill (1979), Study 1 operationalizes the construct of clustered firm’s CE, and examines the effects of CE on firm performance and the moderating effects of environmental dynamism on the ’CE-performance’link. The field work, conducted in Yongkang Hardware Industrial Cluster in Zhejiang Province, reveals that clustered firm’s CE is a four-dimension construct, and is conductive to promote firm performance and upgrading. Environmental dynamism, as a critical contingency variable, positively moderates the relationship between CE and firm performance.In Study 2, we extend the network embeddedness perspective to investigate antecedents of CE of clustered firms, attempting to explore the effects of relational embeddedness (RE), structural embeddedness (SE) and their interactions on CE. Based on the characteristics of clustered firms, we classify their inter-organizational networks into four types and explore their respective impacts on CE. We find that:(1) local and non-local political networks have significant and positive effects on CE. In contrast, local and non-local inter-firm networks do not exert the same effects significantly; (2) clustered firm’s betweenness centrality in local network has negative moderating effect on the relationship between RE of non-local political network and CE; (3) RE of local political networking has significant and positive effects on ’younger’firms, while for’older’firms such effect is not significant; (4) RE of non-local political network has significant and positive effects on’older’firms, while for’younger’firms such effect is not significant.We predict that CE is conductive to upgrade and improve performance for clustered firms. Following knowledge-based view and capability theory, Study 3 explicates the relations among CE, upgrading and firm performance for the first time. We test our theoretical hypotheses with a sample consists of 171 clustered firms within four industrial clusters in Zhejiang Province. We find that:(1) CE has positive effects on upgrading and performance; (2) firm upgrading mediates the relations between CE and firm performance.Study 4 examines the relations among network relational embeddedness, CE and firm performance, and thus integrates separate theoretical models proposed by Study 1 to 3. Building upon network embeddedness theory, RBV and dynamic capability theory, Study 4 proposes a theory framework, theorizing that resources embedded in firm’s political network transform into firm performance by CE. We test our theoretical model by employing structural equation modeling (SEM). The result shows that:(1) relational embeddedness with government either within or outside cluster have positive effects on clustered firm’s performance significantly; (2) as a manifestation of dynamic capability, CE mediates the relationship between government relational embeddedness and firm performance.Throughout Study 1 to 4, this dissertation demonstrate that CE is an important vehicle for clustered firm upgrading and performance improvement, and establish a ’network relational embeddedness-CE-performance’link. We stress that clustered firms should build an appropriate inter-organizational network to improve performance and realize upgrading. On the basis of above findings, we discuss managerial implications and propose several suggestions for both clustered firms and local governments.This study has multiple theoretical contributions to such fields as CE, cluster upgrading, network embeddedness, etc. For the field of CE, we develop and validate a CE scale dedicated to clustered firms, providing a valid measurement instrument for future research. Moreover, we extend the network embeddedness theory to the study of antecedents of CE, adopting a more reasonable and realistic perspective to understand clustered firm’s CE activities. In particular, we find CE by clustered firm is affected by firm’s government relational embeddedness, which is a unique type of network embeddedness in transition economies. It is an important finding in our study, indicating that China in transition has its distinct features and we can’t fully understand CE phenomenon in China with findings from our western counterparts. In addition, we also link CE to the issue of firm upgrading, adding new components to the discussions of consequences of CE. By theorizing firm upgrading as a mediating variable between CE and performance, we contribute to the opening of the’black box’ between CE and performance. As for the field of cluster upgrading, we examine the role of CE in promoting firm upgrading and performance improvement, and therefore add a new perspective to the extant discussions. By comparing the roles played by local and non-local networks, we participate in the discussions on the merits of two cluster-upgrading routes. We not only uncover the merits of local and non-local networks for clustered firms, but also explore the contingencies under which each type of network takes effects. Obviously, in so doing, we deepen related discussions and contribute to the literature on cluster upgrading. To network embeddedness theory, we also have some contributions. We posit that CE is an internal mechanism, which transforms resources embedded in firm’s network into firm performance. Put differently, CE is a mediating variable between network embeddedness and firm performance. The contention is supported by our field work and empirical study. Accordingly, we increase our understanding of the’black box’between network embeddedness and firm performance.