Management Innovation in Chinese Private Firms: The Effects of Resource-Based Advantage and Family Governance

Over the past several decades innovation research has been a conversation across the academia and management field. This paper joins this conversation by focusing on the antecedents of organizational innovation. Drawing on institutional theory, the resource-based view (RBV), transaction cost theory and agency theory, this paper discusses about several particular innovation antecedents that are of extreme importance for a special group of firms (i.e., private firm) in an emerging economy (i.e., China). Specifically, we probe into the effects of actual financial position, financial slack resource and family governance on management innovation in Chinese private firms. We propose that firms with higher actual financial position, more financial slack resources and lower family governance will be more likely to innovate on their management system and to take higher risk level when conducting management innovation. This paper contributes to the innovation literature through three ways. First, concerning the research content, it focuses on management innovation instead of the well-discussed technological innovation. Second, in terms of the research context, it explores innovation phenomenon in an emerging economy and transition market - China, instead of western developed countries. Third, with respect to the research object, this paper examines the innovation behaviors of small private firms instead of big state-owned enterprises or multinational firms that have been investigated a lot. In addition to the theoretical contribution, this paper may also shed light on the management practice.