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Combining efficiency and innovation to enhance performance: Evidence from firms in emerging economies

Published online by Cambridge University Press:  19 December 2018

Xiaowen Tian Open the ORCID record for Xiaowen Tian [Opens in a new window] ,
Vai Io Lo  and
Xiaoxuan Zhai
Xiaowen Tian*
Affiliation:
Murdoch University, Murdoch, Western Australia, Australia
Vai Io Lo
Affiliation:
Bond University, Robina, Queensland, Australia
Xiaoxuan Zhai
Affiliation:
Murdoch University, Murdoch, Western Australia, Australia
*
*Corresponding author. Email: [email protected]
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Abstract

This paper extends the resource-capability-based view in strategic management and discusses the capabilities for the firms to stay competitive in emerging economies. Faced with low levels of efficiency, technology, and skills, firms in emerging economies need to implement best management practices to overcome operational inefficiency while engage in innovation processes to address new opportunities. They have to develop the capabilities to enhance efficiency, the capabilities to undertake innovation, and the synthesis capabilities to combine the two to keep rivals at bay. The paper tests hypotheses against a data set of more than 20,000 firms from 36 emerging economies provided by the World Bank in 2012–2015 and finds strong evidence to support the arguments. The paper finds that the three sets of capabilities are positively related to productivity and, through it, financial performance.

Keywords

efficiencyinnovationsynthesis capabilitiesfirm performanceemerging economies
Type
Research Article
Information
Journal of Management & Organization , Volume 27 , Issue 2 , March 2021 , pp. 295 - 311
Copyright
Copyright © Cambridge University Press and Australian and New Zealand Academy of Management 2018

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