This study investigates the influence of managerial cognition and attention allocation on firms’ responses to negative performance feedback. We explore how managerial cognition, as shaped by managers’ experiences, connections, positions, and industry environments, affects underperforming firms’ attention allocation and, consequently, their decisions to invest in innovation. Utilizing a longitudinal sample of Chinese high-tech firms from 2009 to 2017, we find that firms increase investment in research and development (R&D) when performance falls below aspiration levels. We also document that underperforming firms are associated with an even larger R&D investment increase when their CEOs have an R&D or engineering background, serve simultaneously as the board chair, or are not politically connected. In addition, we highlight the moderating effects of industry competition and industry norms on the relationship between firm underperformance and R&D intensity. We conclude that managerial cognition affects firms’ allocation of attention to innovation as a solution for closing performance gaps and shapes corporate responses to negative performance feedback.

In this article, we examine the cross-cultural variation in the perceived effects of idealized influence and individualized consideration leadership behaviors – two behavioral dimensions of transformational leadership – on followers’ organizational identification in two culturally distinct countries: Russia and Finland. We also test whether the followers’ role ambiguity mediates these relationships. Using the self-concept-based theory of leadership as an explanatory framework, our analysis of white-collar employees in four Finland-based multinational corporations and their subsidiaries in Russia shows that whereas in Russia both behaviors facilitate followers’ identification, in Finland only idealized influence does. We also find differences in how role ambiguity mediates the relationship between the two behaviors and followers’ identification in the two countries. In Russia, it fully mediates the relationship between individualized consideration and followers’ identification, whereas in Finland it partially mediates the relationship between idealized influence and followers’ identification.

The literature suggests that cluster firms may undertake both local and nonlocal geographic searches for knowledge that contributes to their product innovation, and that cluster firms must balance their local and nonlocal searches for product innovation. Yet, previous research has seen local and nonlocal searches as one-dimensional, rather than two-dimensional, activities involving search breadth and depth. In this study, we show that local search and nonlocal search are balanced by jointly considering the breadth and depth of geographic search, and that the optimal balance depends on industry dynamism. Using a sample from two industry clusters in China, we find positive relationships between relative local search depth, relative nonlocal search breadth, and the product innovation of cluster firms. Relative local search depth and relative nonlocal search breadth contribute more to product innovation in stable industries than in dynamic industries.

Acts of financial misconduct in business affect firms in many negative ways. Therefore, why do certain misdemeanants repeatedly commit these acts? We suggest that financial misdemeanants with different social networks will perceive the costs and benefits of committing financial frauds differently, thereby affecting the likelihood of committing financial frauds in the future. To be specific, we suggest that politically connected misdemeanants are less likely to recommit financial frauds, while misdemeanants at interlock network center are more likely to recommit financial frauds. In addition, we propose that misdemeanants are less likely to recommit financial frauds when their partners in the interlock network community are punished for financial frauds. To test our theory, we collected panel data from Chinese listed firms from 2005 to 2014 and employed event history analysis (EHA).

The Indian pharmaceutical industry has experienced rapid growth, becoming the world's largest provider of generic drugs, based on product and process innovation. The industry has undergone dynamic changes in recent decades, operating in a rapidly evolving environment affected by domestic and global policies; a key example of the latter is the TRIPS agreement. Taking an intellectual property perspective, we describe how changes in the innovation ecosystem have affected companies’ strategies related to international activity and accessing knowledge from both internal and external knowledge sources, during the transitional- and post-TRIPS periods (1995–2004 and 2005–2014, respectively). Combining intellectual property arguments with contextual aspects of the innovation ecosystem, we conjecture that, in the post-TRIPS period, externally-sourced knowledge will be more important than internally-sourced knowledge, for Indian pharmaceutical firms’ international business activity.

Outward foreign direct investment (OFDI) by Chinese firms has received considerable research attention recently (Li, Cui, & Lu, 2014; Lu, Liu, Wright, & Filatotchev, 2014; Xia, Ma, Lu, & Yiu, 2014). In particular, a number of studies have focused on cross-border mergers and acquisitions (M&As) involving Chinese firms (Li, Li, & Wang, 2016; Li & Xie, 2013; Xie & Li, 2016; Zhang, Zhou, & Ebbers, 2011). Following Child and Marinova's (2014) suggestion that both the home and host country institutional contexts play important roles in determining M&A activity, Buckley and his colleagues have examined how China's ‘Go Global’ policy influences the location choices in Chinese acquisitions and also how host country political risks affect such activities (Buckley et al., 2016). They looked into national political and legal conditions (see also Meyer, Estrin, Bhaumik, & Peng, 2009), and also examined a large dataset on China's cross-border M&As. Much of the previous work in this area has focused on greenfield investments (Duanmu, 2012; Kang & Jiang, 2012), so the work of Buckley et al. (2016) has broken new ground.

This commentary reviews Chinese management research since its beginning more than thirty years ago and considers the emerging paths that contemporary scholars may follow. Following Barney and Zhang's (2009) article as well as Whetten's article (2009) in this issue, we first clarify what the two paths (a theory of Chinese management and a Chinese theory of management) would mean for the Chinese scholar. We then discuss the possible interplay between these two paths and suggest it is time to take the road less travelled rather than to over-travel the more popular road. We conclude that practice will prove the final judge on the paths pursued and that the insights from the Barney and Zhang and Whetten articles help sharpen our understanding of the challenges.

Drawing upon two independent samples from mainland China, we propose and investigate the deterrence function of leadership behavior focused on control. We suggest that controlling leadership, specifically, authoritarian leadership, deters employees’ deviance under certain conditions. That is, authoritarian leadership thwarts employees’ interpersonal deviance behavior when leaders send clear signals of potential punishments of non-compliance by showing low leader benevolence, and when employees are highly dependent on the leaders for important work resources. Results from two independent studies largely support our key propositions. Overall, these results add to the range of possible impacts that a leader can play in decreasing employee deviance. Theoretical implications and directions for follow-up research are discussed.

We study the impact of formal and informal institutions perceived and experienced by firms on their innovation using the 2012 World Bank Enterprise Survey data in China. We propose a framework to identify different innovator types of firms. Our analysis shows that (1) perceived constraints from the governmental system make firms more likely to be innovators than non-innovators; (2) perceived constraints from the legal system make firms more likely to be imitators than innovators; (3) lack of formal finance makes firms more likely to be non-innovators than innovators; (4) prevalence of bribery makes firms more likely to be non-innovators than innovators but less likely to be innovation pretenders than innovators. Our study enriches institutional theory and innovation research by establishing a framework that encompasses multiple dimensions of formal and informal institutions perceived and experienced by firms and the impacts of such perception and experience on firms’ propensity to become certain type of innovator.

An institutional perspective has been increasingly adopted in recent studies to explain various aspects of internationalization activities of firms from emerging economies (Meyer & Peng, 2016; Peng, Wang, & Jiang, 2008), particularly China (Cui & Jiang, 2012; Morck, Yeung, & Zhao, 2008). Scholars often claim that the role of institutions in emerging economy firms’ internationalization is understated, hence more research is needed. In this commentary, which reflects on the intended contributions and theoretical and empirical issues of Buckley, Yu, Liu, Munjal, and Tao (2016), I aim to extend a discussion on whether and when such institutional explanations can be overstated. I focus on three issues: (1) conceptualization of institutions, (2) theorizing institutional effects, and (3) testing institutional effects. On each of these issues, I start by providing an overview of some common challenges in the literature. I then focus specifically on the paper as an illustration of how some of these challenges may be manifested. This is then followed by some recommendations for future research. Overall, I argue that pitfalls related to the conceptualization, theorizing and testing of institutional effects can lead researchers to overstate the institutional effects on firm strategic behaviors. These pitfalls can be avoided if researchers clarify the theoretical boundary of the institutional argument they adopt, properly model the institutional effects while taking into consideration other theoretically relevant constructs and mechanisms, and employ empirical design to overcome measurement errors and selection biases when testing not only the statistical significance, but also substantive (economic) significance of institutional effects.

This study examines the role of human resources in strategy formulation processes in China's emerging market. Employing a qualitative data driven thematic analysis, we present evidence collected from six comparative case sites of Spanish firms in China. Our findings suggest that high performing firms use a dynamic adaptive logic while lower performing firms use a static structural logic. A dynamic adaptive model of strategic human resource management is identified, emphasizing a fluid and informal process between strategy, human resources and international management.

In this study, we use the context of corporate social responsibility (CSR) suspension and provide a case study from China to show how conditions allowed shareholders to seize power and alter a firm's mission. We show that managers reacted to a change in shareholder power by changing their priorities to correlate with shareholder influences. Our dynamic model first highlights the importance of precipitating events that allowed shareholders to seize power. In response, managers rebalanced their priorities, paid more attention to the shareholders who demanded higher profits, and suspended ethical and discretionary responsibilities as a result. We further present evidence that CSR suspension subsequently harms relationships between stakeholders and threatens firm survival. We contribute to stakeholder theory by providing a dynamic model for interpreting stakeholder influences and managers’ subsequent responses. We add to corporate social responsibility studies by providing a more nuanced understanding of CSR suspension.

This study examines the mediating effect of growth strategy (including market and product expansion strategies) on the linkage of market orientation (MO) to firm performance and the moderating effects of a firm's external connections (including political and business ties) on the relationship between MO and growth strategy. It finds that both market and product expansion strategies are key conduits through which MO improves firm performance. In addition, the relationship between MO and market expansion strategy is positively moderated by political ties but negatively moderated by business ties, while the linkage of MO to product expansion strategy is moderated negatively by political ties but positively by business ties. By combining mediating and moderating effects in a framework that integrates MO, growth strategy, external connections, and firm performance, this study enriches our knowledge on the implications of MO and provides insight into factors that facilitate firm growth.

Exposing under which conditions management innovation diffuses within firms, this study investigates at the individual level the mediating influence of middle managers’ voice behavior on the relationship between CEOs’ empowering leadership behavior and perceived management innovation. We also propose that the magnitude of this relationship depends on middle managers’ collectivist orientation. This study exploits a unique Moroccan sample of small and medium-sized enterprises (SMEs) and utilizes structural equation modeling to analyze the studied relations. We found that the positive relationship between CEOs’ empowering leadership behavior and management innovation is mediated by middle managers’ voice. This effect is conditioned by middle managers’ collectivist orientations, which positively influence their attention to CEOs’ signals and the value and frequency of their contributions to management innovation. While research has identified the external and organizational factors that shape management innovation, our study concentrates on the individual level and accentuates that middle managers’ closeness to management processes, combined with their access to technical knowledge, renders them essential to management innovation. We contradict arguments that middle managers may be less inclined to help management innovation to emerge. SMEs can systematically invest in management innovation by advancing their managerial capabilities and considering individual value orientations.

Drawing on the job-demand resource theory, the article examines the relative importance and the complementarity of three widely practiced leadership styles – transformational, paternalistic, and authoritarian. It investigates how the three styles relate to followers’ work engagement amongst employees in Russian domestic organizations. It also theorizes and tests the mediating effects of three psychological mechanisms, namely self-efficacy, self-esteem, and job control, on the examined relationships. The findings show that all three leadership styles relate to followers’ work engagement positively. The relationship of transformational leadership is dominant and mediated by all three psychological mechanisms. The remaining two styles also make their unique contributions to followers’ work engagement. Whereas authoritarian leadership influences followers by enhancing their self-efficacy and self-esteem, paternalistic leadership operates more extrinsically by increasing followers’ job control. Surprisingly, our analyses found that the role of control variables such as gender, age, and hierarchical position were insignificant in predicting how the three leadership styles influence employee work engagement. The study is among the first to shed light on the relative importance of the three focal leadership styles, their differential influences and interrelations, and the different mechanisms through which they relate to followers’ work engagement.

Using recent substantive results on China and the West, we highlight some virtues to Mill's method of residues for comparative network research. The result is research that combines the emic-etic approaches discussed by Leung (2009) with the spirit of Whetten's (2009: 49) efforts to make ‘theory borrowing more context sensitive’. We draw on recent comparative research about the competitive advantage enjoyed by network brokers, trust facilitated by embedding a relationship in a closed network, the subset of Chinese relations that constitute guanxi, the idea of American and European guanxi, different business environments maintained by the same network mechanism, cocoon networks, small-world networks, the longer history apparent in Chinese networks, and job search via colleagues, friends, and family. We also illustrate the value of data graphs for the expository value of the method of residuals in comparative network analyses.

Family business owners and researchers tend to overwhelmingly focus on the top-level structure of firms but ignore the middle-level practice – involving family members in the middle-management team. Compared to top managers at the strategic apex, middle-level managers are mainly responsible for internal operations and control, and the composition of the middle-management team has an immediate and direct impact on the overall workforce efficiency of family firms. Integrating agency theory and organizational justice perspective, we proposed that family involvement in middle management would have a negative impact on the labor productivity of family firms. We further corroborated this effect by identifying three boundary conditions at the individual (i.e., familial CEO), organizational (i.e., firm size), and regional (i.e., labor mobility) levels. Using a sample of 1,284 privately owned family firms in China, we found that family involvement in middle management, measured as the percentage of familial middle-level managers, was negatively associated with labor productivity. Furthermore, this negative relationship existed only when the CEO is a family member rather than a professional manager, when the size of the firm is large rather than small, or when the firm is located in regions with low rather than high labor mobility. These findings contribute to family business literature and provide practical implications for human resource management in family firms.

We propose an integrative model on how contextual distance influences the learning process and performance of international strategic alliances (ISAs). We argue that contextual distance increases knowledge diversity but decreases knowledge exchange between the alliance partners, which has implications for the alliance's knowledge creation and performance. A meta-analysis of 46 empirical studies published between 1990 and 2013 dealing with Sino-foreign collaborations in China revealed that contextual distance showed an inverted U-shaped relationship with alliance performance. Proxies for partners’ contextual experience, for example, the length of an alliance's operation in China, the foreign partners’ in-country experiences, and ISAs’ location in a more developed Chinese region, moderate the learning processes. Implications and directions for future research are discussed.

We investigated how third party managers from China, Japan and the USA intervened in employees' disputes. Consistent with predictions, we found (using non-linear HLM analysis) that managers who were superiors to the disputants behaved autocratically and/or decided on conservative (e.g., contract adhering) outcomes; but managers who were peers (especially in China and the USA), generally involved disputants in decision-making and obtained integrative outcomes that went beyond initial contract related mandates. Our results extend prior research and theorizing using the dispositional and constructivist perspectives on culture by introducing norm complexity as an explanation for variations in third party conflict intervention behaviour within one culture.