We conducted two studies to investigate the contingent role of regional human capital quality (i.e., the knowledge, skills, and abilities of the collective workforce in a region) in the relationship between firm-level human resource (HR) practices (i.e., practices focusing on employees’ human capital development) and firm performance in China. Drawing upon human capital theory, we hypothesized that the human capital–enhancing HR practices and regional human capital quality have a substitutive effect on firm performance. Study 1 uses a World Bank survey of 9,125 firms in 30 provinces. We found that the human capital–enhancing HR practices relate more strongly to firm performance when regional human capital quality was lower than when it was higher. Study 2 used a sample of 203 firms across seven provinces. We found similar results. We further hypothesized and found that the substitutive effect of regional human capital quality was stronger when a firm adopted an innovation strategy. Our findings provide new evidence for the contingency perspective of strategic HR management and highlight the importance of matching HR practices with local labor quality conditions and the business strategy of the firm.

In a transitional economy such as China's, when resources are unevenly distributed across different sectors, the disadvantaged sector may seek a growth path that bypasses resource constraints. We investigated this phenomenon in the context of the Chinese real estate industry. By comparing the post–merger and acquisition (M&A) performance of acquiring firms between state-owned enterprises (SOEs) and privately-owned enterprises (POEs), we attempted to show that POEs are better performers in the market should they be granted equitable resources, and the superior performance is strengthened by market-oriented institutional environment. We used M&A events data of publicly listed real estate firms in China from 2004 to 2012, in conjunction with firm characteristics and province-level market environment data. We found the results to be consistent with our hypotheses. In particular, compared to SOEs, privately-owned acquiring firms tend to have better post-M&A performance when both the regions of the acquirer and the target have high level of marketization. The results suggest that the private sector in China's transitional economy is potentially more efficient than the state-owned sector, as long as the market environment is favorable.

‘The truth is under attack’, I wrote earlier this decade (Levine, 2012). As the replication crisis became apparent, the alarm was timely. But now, a counter-attack is raging. In its arsenal are replications, open data, shared instruments, pre-registration of hypotheses and now – data visualizations.

This paper discusses some aspects of innovation in China. As China seeks to transition to a knowledge-based economy, it may become more important for China to develop innovative technologies to sustain economic growth. How do China's history, culture, institutions, and organizations aid or hinder innovation? How does China's national innovation system compare to the innovation culture in the US, as well as other developed and emerging economies? What are the prospects for the future of the Chinese national innovation system?

Our starting point is the Needham Puzzle – the paradox that while China was once a world leader in technological development, it fell behind; the Industrial Revolution happened in Europe rather than in China. Potential explanations for the Needham Puzzle may shed light on the challenges facing innovation in modern China. We identify three factors that might help explain the Needham Puzzle; assess how the Needham Puzzle and Chinese culture and history have affected the modern innovation system; discuss comparative aspects of innovation ecosystems in the United States and elsewhere; and suggest that Chinese innovation emphasizes exploitation and refinement of existing knowledge to the exploration and development of new knowledge. We also discuss implications for the future of innovation in China.

This study investigates the influence of managerial cognition and attention allocation on firms’ responses to negative performance feedback. We explore how managerial cognition, as shaped by managers’ experiences, connections, positions, and industry environments, affects underperforming firms’ attention allocation and, consequently, their decisions to invest in innovation. Utilizing a longitudinal sample of Chinese high-tech firms from 2009 to 2017, we find that firms increase investment in research and development (R&D) when performance falls below aspiration levels. We also document that underperforming firms are associated with an even larger R&D investment increase when their CEOs have an R&D or engineering background, serve simultaneously as the board chair, or are not politically connected. In addition, we highlight the moderating effects of industry competition and industry norms on the relationship between firm underperformance and R&D intensity. We conclude that managerial cognition affects firms’ allocation of attention to innovation as a solution for closing performance gaps and shapes corporate responses to negative performance feedback.

This article investigates the relationship between director networks and earnings quality in Malaysia. Using data on 4,416 individual directors who served on the boards of 745 firms listed on Bursa, Malaysia during 2011, we map the entire network of directors and generate measures to reflect the size and quality of information within the network. We find a negative and significant relationship between the overall connectedness of a director's network and the firm's earnings quality. In addition, we find a negative and significant relationship between the political connectedness of the director's network and earnings quality. Our results are robust for different measures of earnings quality.

This paper argues that it is crucial to take account of both home and host country contexts in order, adequately, to understand their implications for Chinese enterprises investing into foreign countries. This calls for an analysis that is sensitive to both home and host country contexts, and that takes into account how the institutions and political systems in those contexts establish institutional and resource capital needs for the overseas-investing firm. We discuss and illustrate three different combinations of Chinese and host country characteristics, and the firm-level learning and adaptation required in the light of the relevant capitals likely to be available to Chinese firms. The analysis draws upon insights from resource-based, institutional, and political perspectives. While it is developed with specific reference to China, we also suggest that this form of analysis can be applied more generally to the implementation of outward foreign direct investment from any country.

The need to innovate is relevant to many firms around the globe and is particularly pressing for those in emerging markets. They face global competition, are under-resourced, and suffer from weaker institutional support. It is suggested that to innovate successfully in this context, indigenous firms would benefit from focusing on managing their current knowledge base more efficiently. We know little about how knowledge management works outside developed economies and which knowledge governance mechanisms have more influence than others in the context of emerging economies. To address this gap, we explore how context may matter for the use of knowledge governance mechanisms and their effect on innovation performance in Brazilian firms. Using the survey data of 109 firms, structural equation modelling, and cluster analysis, our findings suggest that the joint application of knowledge-focused rewards, organizational design, and information and communication technologies that support knowledge processes is critical for boosting innovation performance. We discuss how the peculiarities of the Brazilian context may shape these findings. Our article contributes to the knowledge management and innovation literature by demonstrating that the joint effects of bundles of knowledge governance mechanisms and contextual variables should be explored in order to understand their impact on organizational outcomes.

This interview contributes to the conversation around the automobile industry by focusing on the Chinese electric vehicle (EV) sector. Both of the discussants’ research interests encompass China's industrial competitiveness, innovation, science and technology policy, and the evolution of Chinese manufacturing industries. Professor Feng Lu, the interviewee, has conducted continuous and substantial fieldwork tracing the development of the Chinese automobile industry. He was one of the first experts to urge the Chinese government to help local automobile manufacturers develop innovation capabilities and proprietary products. Further, his 2005 book, The Policy Choice to Develop China's Automobile Industry with Independent Intellectual Property Rights, profoundly influenced the national policy transition toward emphasizing in-house innovation.

This article provides background information on public and non-profit sector innovation in the past thirty years in the West as well as in China. We summarized and commented on the articles in this issue, which document cases of public and non-profit sector innovation in China and theorize their significance. These cases tell vivid stones about how Chinese organizations innovate and also point out the importance of the role of government in initiating or constraining these innovations. We find, through the review of these studies, that China's public and non-profit sector organization innovation experiences carry some important messages about the unique features of China's public and non-profit organizations that should not be ignored while studying changes in China.

There is still an ongoing debate regarding the firm performance implications of pay gaps between top executives and subordinate employees. This study integrates relative deprivation theory and tournament theory to investigate the potential nonlinear effects of pay gaps. We expect that at low levels of pay inequality, increased inequality hurts firm productivity, while at higher levels of pay inequality, increased inequality helps firm productivity. Our study of Chinese firms confirms that pay gaps have an approximately U-shaped relationship with firm performance. This nonlinear relationship is weaker in state-owned enterprises (SOEs) than in non-SOEs, suggesting that state ownership is an important moderator in the association. Overall, this study explains previous mixed findings regarding consequences of pay gaps with meaningful implications for policymakers and entrepreneurs in China and other economies with similar cultural and institutional backgrounds.

This editorial essay addresses the importance of independent thinking in the process of developing outstanding scholarship. Through analysing the difficulties of maintaining independent thinking in the Chinese culture, the paper proposes four approaches: understanding the power of the minority; transforming outside pressure into intrinsic motivation; listening with an open mind; and developing a passion for research.

The existing literature does not provide adequate insight into the initial diffusion of new management practices, especially those that yield no immediate economic benefits, and have not yet gained legitimacy. We study how firms’ local institutional environments influence early adoption behavior, examining the spread of corporate social responsibility (CSR) reports in China's banking industry from 2006 to 2011. We find that banks are more likely to be first movers of CSR reporting if they operate in communities where more companies publish CSR reports or where there are guidelines encouraging CSR reporting, and the impacts of these two institutional factors are further moderated by the length of time that banks have operated in communities. Our study highlights the usefulness of institutional theory in understanding the initial adoption of new management practices, when the organizational field is defined as a geographic community instead of an industry sector and its supply chain.

This study adopts a configurational perspective to examine how business model designs and contextual factors in transforming economies combine to create value. We investigate configurations of efficiency-centered and novelty-centered business model designs, corporate ownership, development stage, and external regulatory volatility associated with high growth in a transforming economy. Using a fuzzy-set qualitative comparative analysis of Chinese firms, we find five solutions associated with superior growth, suggesting that the effective configurations of business model designs vary in different contexts. Our study offers a holistic understanding of the relationship between business model designs and firm growth, and yields useful insights for business model designs for practitioners.

Loan guarantees to related parties by affiliated subsidiaries within family controlled pyramids form a means by which the controlling family expropriates value from minority shareholders. The controlling family, however, will attempt to escape blame for the behavior. Using a sample of 1785 listed Chinese firms affiliated with family-controlled business groups, we explore how family governance structure affects the use of related party loan guarantees. As hypothesized, we find that affiliates with non-family chairmen, but with family directors or senior executives, issue larger volumes of loan guarantees to related parties, whereas affiliates with family chairmen and those with non-family interlocking chairmen do not. The behavior is moderated by regional institutional development.

This study compares East Asians' evaluations of task and maintenance inputs in reward allocation decisions and examines the effects that inequity in various types of inputs and rewards have on fairness judgements. Based on a sample of 587 employees from various organizations in Hong Kong, Japan, and South Korea, we find that Hong Kong Chinese and South Korean employees are more likely to want their organizations and supervisors to emphasize maintenance inputs, while Japanese employees value task inputs in reward allocation. Results also show that there are significant country differences in fairness judgements associated with various types of inputs. For example, the positive relationship between pay level and perceived fairness of pay is significantly stronger when task contributions are high rather than low among Japanese employees but not among Hong Kong and South Korean employees. The concept of independent self-construal (similar to individualism at the societal level) seems to provide an adequate account of the country differences in choice of input preferences but not fairness judgements.

Managing a successful research team involves a variety of activities and potential issues. In this article, we discuss these issues based on our experience of having worked together for 20 years with regular team meetings that include Ph.D. and undergraduate students and occasionally other faculty colleagues. We attempt to describe the challenges that occur, including some ethical issues, and distil the knowledge we have gained over the years. We pose and answer nine questions about our team processes and procedures and end with a brief summary of key learning.

Previous research has debated whether guanxi persists or declines with the development of formal institutions. This study addresses this debate by investigating how the development of formal institutions in China's state-owned organizations influences employees’ guanxi behavior. Building on institutional logics theory, I propose that guanxi behavior is a reaction to the socialist institutions adopted by state-owned enterprises (SOEs) and is associated with the collective identity of SOEs. Thus, employees’ identification with SOEs is the mechanism that influences their guanxi behavior. A survey of 721 employees from 12 organizations compared guanxi behavior across three types of organizations with different degrees of state ownership: SOEs, public firms, and joint ventures. The results showed that the employees of joint ventures identify less with SOEs and engage in less guanxi behaviors than do SOE employees. The employees of public firms still identify with SOEs, and their guanxi behavior did not differ from that of SOE employees. Identification with SOEs mediated the effect of organizational type on guanxi behavior, whereas formalization did not. Therefore, the development of formal institutions does not necessarily decrease guanxi behavior, and its effect depends on whether the collective identity underlying guanxi is changed. This study has important implications for guanxi research, institutional logics theory, and transition economies.

Exposing under which conditions management innovation diffuses within firms, this study investigates at the individual level the mediating influence of middle managers’ voice behavior on the relationship between CEOs’ empowering leadership behavior and perceived management innovation. We also propose that the magnitude of this relationship depends on middle managers’ collectivist orientation. This study exploits a unique Moroccan sample of small and medium-sized enterprises (SMEs) and utilizes structural equation modeling to analyze the studied relations. We found that the positive relationship between CEOs’ empowering leadership behavior and management innovation is mediated by middle managers’ voice. This effect is conditioned by middle managers’ collectivist orientations, which positively influence their attention to CEOs’ signals and the value and frequency of their contributions to management innovation. While research has identified the external and organizational factors that shape management innovation, our study concentrates on the individual level and accentuates that middle managers’ closeness to management processes, combined with their access to technical knowledge, renders them essential to management innovation. We contradict arguments that middle managers may be less inclined to help management innovation to emerge. SMEs can systematically invest in management innovation by advancing their managerial capabilities and considering individual value orientations.