Antecedents and Innovation Performance Implications of MNC Political Ties in the Chinese Automotive Supply Chain

Jean, Ruey-Jer Bryan; Sinkovics, Rudolf R.; Zagelmeyer, Stefan

Abstract

The development of political ties represents a non-market strategy, which may substitute for formal contracts in safeguarding against transaction risks of innovation processes in emerging markets with weak institutions, such as China. Previous work has largely ignored the role political ties play in product innovation, and especially with respect to subsidiaries of foreign multinational corporations (MNCs). This study investigates the antecedents and role of political ties in relation to the innovation performance of foreign subsidiaries supplying automotive parts in China. Our analysis is based on survey data from 170 foreign MNC supplier firms in China. A partial least squares structural equation modelling (PLS-SEM) approach is employed to examine relationships through a ‘soft-modelling’ analysis, using SmartPLS 3. The results empirically confirm the positive impact of political ties, in terms of enhancing foreign MNCs’ product innovation performance in China. Furthermore, it is found that the extent to which foreign suppliers invest in and maintain political ties is driven by a mix of organizational and environmental factors, namely protection orientation, relationship-specific investment, technological dynamism and competitor opportunism. The paper contributes to the understanding of the antecedents and the implications of political ties with respect to the innovation performance of foreign MNC subsidiaries in emerging economies.

Citation

Jean, R.-J. B., Sinkovics, R. R., & Zagelmeyer, S. (2018). Antecedents and Innovation Performance Implications of MNC Political Ties in the Chinese Automotive Supply Chain. Management International Review, 58(6), 995-1026. https://doi.org/10.1007/s11575-018-0370-2

• Journal Article Type: Article
• Acceptance Date: Oct 22, 2018
• Online Publication Date: Nov 28, 2018
• Publication Date: 2018-12
• Deposit Date: Sep 12, 2024
• Journal: Management International Review
• Print ISSN: 0938-8249
• Electronic ISSN: 1861-8901
• Publisher: Springer
• Peer Reviewed: Peer Reviewed
• Volume: 58
• Issue: 6
• Pages: 995-1026
• DOI: https://doi.org/10.1007/s11575-018-0370-2
• Keywords: Product innovation, Political ties, Institutional environment, Emerging market MNCs, PLS-SEM
• Public URL: https://durham-repository.worktribe.com/output/2773160