The Contingent Effect of IT Use on Product Innovation in the Transition Economy: A Qualitative Comparative Analysis

ABSTRACT

Scholars have developed a large and robust literature examining the impact of IT on firm innovation. However, this literature often produces divergent, likely context-dependent, results and tends to be limited to developed economies. As a result, we have only partial knowledge about how IT use impacts product innovation. This study rectifies that deficiency and resolves prior divergent findings by employing fuzzy set Qualitative Comparative Analysis (fsQCA) to investigate the contingent effects of IT use for exploration and exploitation on product innovation in China, which is transitioning from a centrally planned economy to a market economy. We draw on a unique sample of 262 Chinese manufacturing firms that responded to the World Bank’s Enterprise Survey and developed several configurations of conditions where IT use fostered product innovation depending on the institutional characteristics of a transitional economy, specifically its degree of market competitiveness and legal enforcement. Our findings share similarities to prior studies set in developed economies, while demonstrating features unique to a transition economy. Using a configurational approach reveals the combinational and asymmetric relationships among IT use, the institutional environment, and resultant product innovation. This helps understand situational characteristics often unexamined in prior studies and complements the findings from regression-based studies.

KEYWORDS:

• Exploitation
• exploration
• institutional environment
• IT use
• market environment
• product innovation
• QCA

Disclosure Statement

No potential conflict of interest was reported by the authors.

Notes

1. A constant of 0.001 was added to the calibration values of IT use below the full membership score of 1, so that the cases with a precise 0.5 membership score could be kept in fsQCA, see Fiss (2010).

2. As Fiss (2011) defined, “within a given typology, more than one constellation of different peripheral causes may surround the core causal condition, with these permutations of peripheral elements being equally effective regarding performance.”(Fiss, 2011, p. 394).

Additional information

Funding

The research is supported by Scientific Research Project of Liberal Arts Development Fund of Nankai University (Grant No. ZB22BZ0208) and National Natural Science Foundation of China (Grant No. 71972111).

Notes on contributors

Feng Zhang

Feng Zhang is a professor of marketing and innovation at Nankai University, China. He received his Ph.D. in Business Administration from Nankai University. His current research interests are innovation and strategy in the emerging market. His publications have appeared in journals such as Journal of Product Innovation Management.

Geoffrey G. Bell

Geoffry G. Bell is an associate professor of strategic management at the University of Minnesota Duluth. He received his Ph.D. from University of Minnesota. He examines the influence of geography and networks on firm performance. His papers have been published in Academy of Management Review, Strategic Management Journal, Organization Science, and elsewhere.

Dahui Li

Dahui Li is a professor of MIS at the University of Minnesota Duluth. He received his Ph.D. from Texas Tech University. His current research focuses on business-to-consumer relationships, online communities, and technology innovation. He has had papers published in Decision Sciences, Decision Support Systems, Information & Management, Journal of the Association for Information Systems, Journal of Product Innovation Management, and elsewhere.

Lidong Wu

Lidong Wu is a professor of corporate governance at Nankai University, China. He received his Ph.D. from Nankai University. His research interests include corporate governance, organizational theory and diagnosis. His publications have appeared in various Chinese journals.