Innovative Climate, a Determinant of Competitiveness and Business Performance in Chinese Law Firms: The Role of Firm Size and Age

Abstract

In the past few decades, a firm’s innovative climate has received much attention in the context of innovative behavior, competitiveness, and business performance. The existing literature has relied to a great extent on innovative climate as an interacting factor and overlooked its role as an antecedent of various organizational phenomena. Furthermore, the interaction effects of the firm’s size and age on the relationships between innovative climate and other organizational variables have gone unnoticed. This study adds to the literature by empirically assessing the effects of the firm’s innovative climate on organizational learning and employees’ innovative behavior as well as its consequences on the firm’s competitiveness and business performance. Additionally, it addresses the interaction impacts of firm size and age on the relationships between the abovementioned variables. This research achieves its goal by developing an integrative research design that analyzes complex relations using covariance-based structural equation modeling (SEM) and regression techniques on a dataset of 408 Chinese law firms. The results indicate that the firm’s innovative climate has a significant positive relationship with organizational learning and employees’ innovative behavior. It is also found that organizational learning has a significant positive influence on employees’ innovative behavior. Meanwhile, organizational learning and employees’ innovative behavior have a significant positive influence on firm competitiveness and business performance. Another important finding is that contextual factors, i.e., firm size and age, strengthen these relations. Theoretical and managerial implications, including links to firm size and age, are provided.

Ambidextrous Innovation in Mediating Entrepreneurial Creativity on Firm Performance and Competitive Advantage

“…Exploitative innovation is crucial for new companies, and exploratory innovation is crucial for established companies. Other empirical studies found that new business ventures by established companies with an innovation climate (shown by its management of human resources), were positively correlated with firm performance (Bibi et al, al, 2020). A new business venture offering a service in an intensely competitive environment requires ambidextrous innovation to generate a sustainable firm performance.…”

“…This adaptive capability is pursued through radical or exploratory innovation breakthroughs and incremental or exploitative innovations. Companies with an innovation climate, in the form of human resources supporting a culture of innovation, had a positive correlation with the company's competitiveness (Bibi et al, 2020). Company breakthroughs in innovation in response to environmental changes is a form of balance between exploratory innovation and exploitative innovation.…”

“…Innovative companies or companies having a climate of innovation have an advantage when facing competition. Breakthroughs in innovation can be turned into a competitive advantage and improved firm performance (Bibi et al, 2020). There is no empirical evidence for ambidextrous innovation playing a mediating role in the relationship between creativity and competitive advantage.…”

“…Other empirical studies have shown that both established companies and new business ventures that have an innovation culture that is significantly associated with the firm's competitiveness and the improvement in firm performance. However, a new business venture has limited resources and lower market access than an established company (Bibi et al, 2020).…”

Estrategias de aprendizaje organizacional y tecnologías de la información y las comunicaciones para apoyar la gestión de conocimiento en las pymes del Valle del Cauca, Colombia

“…Abordar temáticas tales como el aprendizaje organizacional y las TIC que presentan avances interesantes tanto para el progreso de las organizaciones como desde su aporte a la competitividad y la innovación (Bibi et al, 2020;Bilan, Hussain, Haseeb y Kot, 2020; Hindasah y Nuryakin, 2020) justifica la importancia del estudio en esta temática. Además, a partir de esta investigación es posible proponer estrategias de apoyo para que las pymes se constituyan en organizaciones más productivas.…”