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The evolving role of managerial ties and firm capabilities in an emerging economy: evidence from China

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Abstract

As emerging economies experience unprecedented market and institutional changes, where should firms focus their attention to address new marketing challenges: network-based resources (e.g., managerial ties) or market-based capabilities? Building on institutional theory, this study examines the evolving roles of managerial ties and firm capabilities, as well as their interplay, in China. A longitudinal survey of 166 Chinese firms reveals that over time, the positive role of ties with the government (i.e., political ties) declines, whereas the positive effect of ties with the business partners (i.e., business ties) persists; marketing capability has a persistent effect, and technology capability exerts a stronger impact on performance. Moreover, as market development progresses, marketing capability positively interacts with business ties, whereas technology capability positively interacts with political ties, in fostering performance.

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Notes

  1. The marketization index, by the National Economic Research Institute (NERI) of the China Reform Foundation (http://www.neri.org.cn/), assesses the relative level of market development in China on the basis of 24 indicators pertaining to the development of the factor market, private sector, market intermediaries, and legal system. The final score is normalized to a value between 0 and 10; larger values indicate better development (Fan and Wang 2004).

  2. Because both managerial ties and firm capabilities are shaped by corporate strategic choices during the institutional transition (Child 1997; Peng 2003), indicators of these constructs reflect corporate behaviors determined by the proactive strategic choices, which means the direction of causality is from the latent constructs to the indicators. In the measurement configuration, removing one item from these latent constructs would not change the nature of the strategic choices. Therefore, consistent with previous studies (e.g., Peng and Luo 2000; Song et al. 2005), we treated them as reflective rather than formative scales.

  3. Test results for 2003/2008: political vs. business ties: Δχ2 (1) = 34.39, p < .01/Δχ2 (1) = 104.90, p < .01; marketing vs. technology capability: Δχ2 (1) = 344.80, p < .01/Δχ2 (1) = 224.89, p < .01; political ties vs. marketing capability: Δχ2 (1) = 372.19, p < .01/Δχ2 (1) = 231.74, p < .01; political ties vs. technology capability: Δχ2 (1) = 326.49, p < .01/Δχ2 (1) = 228.68, p < .01; business ties vs. marketing capability: Δχ2 (1) = 88.08, p < .01/Δχ2 (1) = 118.98, p < .01; business ties vs. technology capability: Δχ2 (1) = 73.46, p < .01/Δχ2 (1) = 89.58, p < .01.

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Acknowledgements

The authors thank the three anonymous reviewers and Editor Tomas Hult for their useful comments. This study was supported by the General Research Fund from the Research Grants Council, Hong Kong SAR Government (Project no. HKU 759011B) and the Strategic Research Grant from City University of Hong Kong (Project No. 7002903).

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Authors and Affiliations

  1. School of Business, The University of Hong Kong, Pokfulam, Hong Kong

    Kevin Zheng Zhou

  2. Department of Marketing, City University of Hong Kong, Kowloon Tong, Hong Kong

    Julie Juan Li

  3. Collat School of Business, University of Alabama at Birmingham, Birmingham, AL, 35294, USA

    Shibin Sheng

  4. School of Business, College of Charleston, Charleston, SC, 29424, USA

    Alan T. Shao

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Correspondence to Kevin Zheng Zhou.

Appendixes

Appendixes

Appendix 1

Table 4 Measurement items and validity assessment
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Appendix 2

Table 5 Standardized estimates of stage-1 regression analyses
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Table 6 Measurement items and validity assessment: antecedents in stage-1 model
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Zhou, K.Z., Li, J.J., Sheng, S. et al. The evolving role of managerial ties and firm capabilities in an emerging economy: evidence from China. J. of the Acad. Mark. Sci. 42, 581–595 (2014). https://doi.org/10.1007/s11747-014-0371-z

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