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Re-Innovation from Failure, Institutional Environmental Differences, and Firm Performance: Evidence from China

Author

Listed:
  • Zhuang Xiong

    (School of Business, Zhengzhou University of Aeronautics, Zhengzhou, China)

  • Pengju Wang

    (School of Economics and Management, Zhongyuan University of Technology, Zhengzhou, China)

  • Yu Zhao

    (College of Sciences and Engineering, University of Tasmania, Hobart, Australia)

Abstract

Due to an anti-failure bias, theoretical and practical studies have not focused much on the problem of innovation failure. The literature does not include studies on how the effect of re-innovation input on firm performance can still be explained by existing theories, especially in the case of previous innovation failures. To explore the intrinsic relationship between the re-innovation from failure and firm performance, as well as the influencing mechanism of the institutional environment differences on a firm’s re-innovation activities, using the data of the Listed Companies in China’s pharmaceutical manufacturing industry from 2008 to 2014 and a multiple regression model, the relationships between the re-innovation from failure, institutional environment differences, and firm performance were analyzed from 3 aspects: government intervention, financial development, and legal environment. The results show that the re-innovation input from failure has a significant positive impact on firm performance. The level of government intervention and the level of financial development play significant negative and positive moderating roles in the relationship between the re-innovation input and firm performance, respectively, and the above-mentioned effects are more prominent in eastern China. Moreover, with the improvement of the marketization of the financial industry, the beneficial effect of the re-innovation input from failure on firm performance in state-owned firms will be further strengthened. However, the moderating effect of the legal environment is not obvious.

Suggested Citation

  • Zhuang Xiong & Pengju Wang & Yu Zhao, 2020. "Re-Innovation from Failure, Institutional Environmental Differences, and Firm Performance: Evidence from China," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 22(53), pages 197-197, February.
    • Handle: RePEc:aes:amfeco:v:22:y:2020:i:53:p:197
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    References listed on IDEAS

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    Cited by:

    1. Zhuang Xiong & Pengju Wang & Chengxia Wu, 2022. "How to encourage innovation failure knowledge sharing in virtual research organization: an incentive mechanism based on game theory," Computational and Mathematical Organization Theory, Springer, vol. 28(3), pages 193-213, September.
    2. Yonghong Ma & Huili Ni & Xiaomeng Yang & Lingkai Kong & Chunmei Liu, 2023. "Government subsidies and total factor productivity of enterprises: a life cycle perspective," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 40(1), pages 153-188, April.
    3. Baxter, David & Trott, Paul & Ellwood, Paul, 2023. "Reconceptualising innovation failure," Research Policy, Elsevier, vol. 52(7).

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    More about this item

    Keywords

    re-innovation from failure; institutional environment; firm performance; moderating effect;
    All these keywords.

    JEL classification:

    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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