State as a path breaker? Path-dependent behaviours and firm innovation: the moderating role of institutional forces

ABSTRACT

This paper explores the effects and mechanisms of institutional forces on the relationship between path-dependent behaviours and innovation performance from an integrated framework combining path dependence and institution-based views. We first examine the effects of path-dependent behaviours, manifested as product line retention and extension, on incremental and radical innovation performance. In investigating this relationship, we join the institution-based view and propose that the effects of path-dependent behaviours are contingent on political and economic institutional forces. Using the samples of Chinese listed pharmaceutical enterprises from 2010 to 2016, we reveal that path-dependent behaviours are conducive to incremental innovation but detrimental to radical innovation. More importantly, while economic institutional forces can enhance the effects of these behaviours on both types of innovation, political institutional forces can mitigate their negative impact on radical innovation.

KEYWORDS:

• Path-dependent behaviours
• institution-based view
• product line retention and extension
• radical innovation

Acknowledgements

For insightful comments, we thank the editors and two anonymous reviewers. We have also benefited from discussions at 2022 Academy of International Business Asia Pacific Regional Conference.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This paper was supported by Major Programme of the National Natural Science Foundation of China (grant number72091310); Foundation for Innovative Research Groups of the National Natural Science Foundation of China (grant number 71821002); National Natural Science Foundation of China (grant number 71732008); National Natural Science Foundation of China (grant number 71902173).

Notes on contributors

Guangpei Chen

Guangpei Chen (School of Public Affairs, Zhejiang University) is a PhD candidate at the School of Public Affairs, Zhejiang University. His research examines the interaction between governments and enterprises, and the institutional contingency in this process. He has published in several Chinese journals.

Jiang Wei

Jiang Wei (PhD, School of Management, Zhejiang University) is the dean of the School of Management, Zhejiang University. He is also a professor of strategy and innovation management. He was a visiting scholar in Manchester University from during the period from 2001 to 2002. His research interests include innovation management, strategic management. Specifically, he focuses on how institutions influence mechanisms as well as performance of firm innovation. He has published more than 200 papers and 14 books in Chinese and English.

Yang Yang

Yang Yang (PhD, School of Public Affairs, Zhejiang University) is an associate research fellow at the School of Public Affairs, Zhejiang University. She received her Ph.D. in Business Administration from Zhejiang University. Her current research falls at emerging economies, internationalisation strategy, innovation and organisation in the digital economy. She has published dozens of papers in Chinese and English.