This article studies the latent mechanisms underlying the non-linear correlation between a firm's relative innovation orientation of exploration vs exploitation and performance. We also investigate the moderating effects of cluster relationships on this relationship. Using a sample of 638 SMEs in four industry clusters in Tianjin, China, we confirm an inverted U-shaped correlation between a firm's relative innovation orientation and performance, and explicate the latent mechanisms underlying such an inverted U shape. We find that the number and strength of a firm's cluster relationships can moderate this inverted U-shaped curve: the former moves the turning point of the inverted U shape toward exploratory orientation, and the latter moves the turning point toward exploitative orientation. For improved performance, we discuss appropriate innovation balancing strategies for cluster firms with different cluster relationships, and optimal cluster strategies under different innovation-balancing conditions. This study adds to the increasing scholarly effort on latent mechanisms behind U-shaped relationships and moderating effects on such relationships in management research.

In this study, we focus on the temporal behaviors – speed and rhythm – of outward foreign direct investment (OFDI) by emerging multinational enterprises (EMNEs) and examine the effect of such behaviors on innovation performance. Using a learning perspective, we argue that OFDI speed has an inverted U-shaped effect on EMNEs’ innovation performance, whereas the relationship between the uneven rhythm of OFDI and innovation performance is negative. The results, based on OFDI panel data of 1,092 Chinese firms, support our predictions that a moderate OFDI speed and a more regular pattern of OFDI expansion provide sources of competitiveness and contribute to firms’ innovation performance.

The business ethics literature has paid little attention to the similarities, differences, and interactions between ‘justice climate’ and ‘ethical work climate’, two key perspectives on the moral dimension of organizations that are related to cultural diversity. In this conceptual paper we argue that integrative studies of justice and ethical work climates could contribute significantly to our understanding of the moral dimensions of organizations. We propose a model showing that an organization's moral climate can perform both normative and evaluative functions. With the globalization of business and increasing diversification of the labour force, cross-cultural differences regarding organizational perceptions and behaviours are increasingly salient. Hence, we also explore the influence of cultural diversity in our integrated model with the Chinese business context as a specific example. We conclude by discussing directions for further research on the relationship between cultural diversity and moral climate in organizations.

Institutional logics are interrelated sets of cultural elements (norms, values, beliefs, and symbols) that help people and organizations make sense of their everyday activities and order those activities in time and space. In this paper, we describe the rise of a robust literature on institutional logics, which mostly focuses on Western societies. We then describe changes in Chinese society and economy over the past four decades, as it shifted from state-controlled planning and redistribution to market-mediated exchange. We detail how the institutional logics that guide Chinese firms have been transformed in the wake of the economic transition. The state logic, which developed in the Maoist era, valorizes equality, national community, and political stability. Although it is still in evidence, it has been partly supplanted by a market logic that encourages efficiency, competition, and property rights. But this market logic differs from the one that prevails in Western capitalist economies. The Chinese version of the market logic valorizes the central role that the state and the Communist Party continue to play in economic life. Therefore, in the Chinese version of the market logic, efficiency, competition, and property rights are tempered by a continued concern for political stability. We review and summarize the existing literature on institutional logics and Chinese firms, and then identify fruitful lines that future research could take.

Drawing insights from the institutional embeddedness perspective, this article explores the changing patterns and significance of two types of strategic networking along with the institutional transformation in China. Using two-wave survey data on Chinese private firms, we find that after the state relaxed its control of resources the importance of networking with the state tends to decline, while ties with market actors become increasingly important. Determinants of network investment have shifted from managers’ perceived importance of different types of network ties to a firm's immediate institutional environment. Finally, the impact of networking on firm growth has also altered over time. These findings advance our understanding of the crucial role of the institutional environment in shaping firms’ networking strategies and have important theoretical and practical implications.

Business leaders constitute a powerful driving force for the miraculous growth of the Chinese economy in the past few decades. However, scholars have not developed theories accounting for the unique leadership phenomenon in the Chinese context, characterized by high uncertainty, intense market competition, and constant changes in government regulations and policies. This special issue aims at offering insights regarding business leadership in China. In this paper, we first introduce the three streams of Chinese leadership research, varying in the degree of Chinese context being considered in theory development. We then discuss how Chinese leadership has co-evolved with the transformation of firms and the institutional environment in China. The new values of young employees, born after 1980, are driving the need for leaders to adjust their leadership practices once again. After that, we present a summary of the four papers in this special issue, and the insights they provide to our understanding of leadership and its effectiveness in the Chinese context. Finally, we suggest future research directions for Chinese leadership research.

I am stunned by the failure of so many organizations to create the capability for generating streams of new products and services over time. Organizations capable of ongoing innovation can create more profits, more value, more employment, more growth, and more adaptability to transformations in technologies and markets (BCG study of investor returns). Generating streams of innovation is even more important now, especially for organizations in emerging economies, because industrial transformations and global grand challenges (Ferraro, Etzion, & Gehman, 2015) demand continuous innovations in products, programs, business processes, and strategies. For example, digitalization is transforming business models from vertical industrial silos such as consumer goods, materials, or financials to horizontal platforms that orchestrate networks, create technologies, and provide services (think Amazon, Alibaba). New markets and technologies emerge unpredictably but will produce major economic and social changes. Emerging economies more directly face grand challenge complexities of poverty, water scarcity, inequality, and climate changes. Innovations in emerging economy organizations are also very complex, since they often include innovations in sales, distribution, and business models along with rigorous product design and development processes.

We define the ‘Chinese way’ of internationalization as oriented toward experimental learning, in contrast to traditional internationalization models, such as the Uppsala model. Analyses of survey data of private Chinese firms that have made outward foreign direct investments (OFDI) show that only 50 percent follow the Uppsala model in which firms follow a staged approach. The other 50 percent follow more risky explorative OFDI approaches in which the firms learn on the ground experimentally from their OFDI. We further investigate how the founders’ congenital learning, firms’ inward international experience, potential absorptive capabilities, and motivations to learn, influence OFDI performance and how learning outcomes mediate these relationships. We show that the relationship between the firm’s potential absorptive capacity and its OFDI performance is fully mediated by what the firm learned from the OFDI project. Also the firm’s motivation to learn directly affects performance and is partially mediated by what the firm has learned.

The Management and Organization Review (MOR) special issue on ‘Doing Qualitative Research in Emerging Markets’ aims to advance the quality, diversity, and understanding of qualitative research methods in management in the context of emerging markets. The value of qualitative research is increasingly embraced by management scholars thanks to its merits for building new theories and testing existing ones, as well as exemplifying new phenomena by surfacing contextual idiosyncrasies (Bansal & Corley, 2011; Birkinshaw, Brannen, & Tang, 2011; Eisenhardt & Graebner, 2007; Rynes, 2007; Welch, Piekkari, Plakoyiannaki, & Paavilainen-Mantymaki, 2011). As Bansal and Corley (2011: 234) suggest ‘The beauty of qualitative research is that it accommodates different paradigms and different styles of research and research reporting. Although there are merits to having norms emerge for the style of qualitative research manuscripts, we do not want to stifle creativity’.

Strategic decision makers interpret information and translate it into organizational action through the lens of strategic schemas. How should firms realize high performance with various strategic schemas? Cognitive content and structure have been shown to underlie strategic schemas, but few studies have considered them together. This study employs aggregation analysis to clarify the interaction between cognitive content (technology orientation, market orientation) and structure (complexity, centrality) in affecting the firm performance (FP) of ‘hidden champion’ companies, identified by the Economy and Information Technology Department of Zhejiang Province, China. The empirical method applies fuzzy-set qualitative comparative analysis to generate strategic schema profiles for high FP. This exploratory study fills a gap in the literature on managerial cognition and provides key lessons from ‘hidden champion’ companies in China and their paths for small- and medium-sized enterprises to grow.

This article seeks to unravel the management model used by China's Yunnan Province in its fight against HIV/AIDS. This government-driven, multi-sector partnership model has led to some capacity building and stabilization of HIV transmission among certain at-risk populations. The organizational strategies employed in this model might be useful for resource-poor countries in containing the spread of HIV/AIDS.

The relationship between internationalization and performance has attracted researchers’ attention for more than 40 years, producing contradictory results. Research on emerging-market (EM) multinationals’ performance has not added much clarity to the issue. Although contingency theory is widely applied in management research to explain superior organizational performance as a direct result of a ‘fit’ between structure, strategy, and environment, there has been little effort in extending the notion of strategy-structure-environment fit to include internationalization. We address this limitation by offering a comprehensive analysis of Russian internationalized firms’ performance, which reflects the complexity of strategic and structural changes that Russian firms make during internationalization. We use survey data on 213 predominantly private and mature firms to examine whether the alignment of a multitude of strategic and structural choices in a specific context matters for subsequent performance. We apply a fuzzy-set Qualitative Comparative Analysis (fsQCA) and find several distinct types of ‘fit’ that positively affect Russian internationalized firms’ performance.

This study investigates how CEO behavior and incentives change during the CEO's final years in office, known as the horizon problem. We examine how the horizon problem alters managerial slack, a measure of operational inefficiency and managerial value diversion. Using data on Chinese publicly traded firms between 2003 and 2011, we find that managerial slack increases in the last two years of CEO tenure compared to earlier years. We also show that the increase in managerial slack in CEO final years in office is smaller in privately controlled firms than in state-owned enterprises, smaller in firms with CEO equity ownership and more independent boards compared to those without. We conclude that higher quality corporate governance mechanisms ameliorate the perverse incentives associated with the CEO horizon problem, and reduce CEOs’ tendency to increase managerial slack during their final years in office.

Whereas the existing literature on the relationship between parental behavior and family business succession mainly focuses on parental behavior in the business domain, we highlight the importance of parental behavior in the family domain. Integrating attachment theory, the family business succession literature, and person-job fit literature, our study proposes a theoretical framework hypothesizing that general self-efficacy and perceived person-job fit mediate the association between perceived parental care (an underrepresented family-domain-specific parental behavior) and next-generation family members’ succession intentions. This framework is tested by data from two surveys and further verified by qualitative interviews of next-generation family members. Multivariate analysis results suggest that next-generation family members’ general self-efficacy and perceived person-job fit played a sequential-mediating role in the relationship between perceived parental care and next-generation family members’ succession intentions. Our interviews not only confirm these results but also reveal new insights, particularly into the specific Chinese context in the study of family business succession.