Justin Tan

The knowledge-based competition between agents in an innovation ecosystem not only impacts the survival and development of individuals but also affects the evolution of the innovation ecosystem. From the evolutionary game perspective, this paper explores agents’ choice of appropriability strategies and following strategies in an innovation ecosystem under different environments. An asymmetric evolutionary game model and a multi-agent simulation model are constructed successively to analyze the influence of institutional, ecological, and technological factors on the evolutionary equilibrium stability and evolutionary stable strategies of an innovation ecosystem. It is found that the key factors affecting the equilibrium of system evolution are costs of patent operation and protection, the degree of relief on patent disputes, government subsidies, and the relative technical difficulty between substitution and imitation. Based on different situations formed by the above factors, there are four evolutionary stable states: (patenting, imitation), (patenting, substitution), (secret, imitation), and continuous fluctuation of strategies. The outcomes of simulation models which show random fluctuation are consistent with the results of evolutionary stability analysis in the trend. When a cooperation network is dense or a search scope is wide, the long-term evolution of each group tends to the strategies with large average income expectation due to the increase of interaction, the decrease of decision uncertainty, and the improvement of decision effectiveness. When information fuzziness is high, the uncertainty of decision-making increases, and the system fluctuates more violently. Moreover, the strategic interaction between groups is weakened. The long-term evolution of the system deviates from the results of evolutionary stability analysis.

How does government coordination in the strategic sectors affect the impact of relational resources on firm intellectual property (IP) development in the emerging economies? We investigate this question in the Chinese high-speed train sector from 1993 to 2014. Contrary to prior findings that international joint ventures (IJVs) lead technological innovation in the emerging economies, IJVs underperform in IP development in this context, whereas government-affiliated domestic firms outperform. We argue that government coordination in the strategic sector has escalated cross-border competitive tension but facilitated domestic collaborative innovation. Hence, IJVs face relational liabilities that hinder IP breakthrough, whereas government-affiliated domestic firms can leverage relational assets for innovation. We further examine the effects of ego-network density in the innovation network, which captures the degree to which a firm relies on partners to innovate. Consistent with our theory, innovation network density hampers IP development for the IJVs but promotes that for the government-affiliated domestic firms. Our findings offer actionable insights for innovation managers and policymakers in the strategic sectors. Firm managers should consider the potential influences from government coordination when acquiring relational resources for innovation. Policymakers should keep in mind how government actions may influence both interfirm collaboration and competition when building innovation networks.

This paper explores how political connections influence firms’ credit benefits, especially when the political environment improves. The authors distinguish two types of political connections—connections to government officials and connections to council deputies—according to whether the political benefits they provide are exclusive and definite. Employing a panel data set comprised of Chinese listed firms’ bank-loan contracts from 2008 to 2014, they find politically connected firms—and particularly firms with connections to government officials—enjoy significantly lower loan costs than their non-connected counterparts. Moreover, they find that anti-corruption efforts, which reflect improvement in the political environment, reduce the credit benefits of political connections, but only for firms that have connections to government officials. Results emphasize the value of unpacking the heterogeneity of political connections and illuminate the importance of more complete assessment of corporate political strategies in changing political environments.

Research has highlighted the role of patenting on firms’ performance without elaborating on how patents can be leveraged to capture value. Drawing on the resource‐based view and institutional theory, this research attempts to extend patenting‐performance debate by examining the moderating effects of informal institutions – or specifically, political ties – on the patenting‐performance relationship. We argue that the leverage of political ties could eliminate uncertainty in patent rights by accessing information, reducing transaction costs, and facilitating bureaucratic arbitration, and therefore leads to better performance. Moreover, considering resource limitations and jurisdictional variations, the benefits of such a moderating approach may be more pronounced in a context characterized by high financial slack or low formal institutional development. Our analysis of panel data from 761 Chinese‐listed companies in the chemical, electronics, and pharmaceutical industries provides supports for both the moderating role of informal institutions on the patenting‐performance relationship and the contingency effects of financial slack and formal institutional development. This paper contributes to patent management literature by elaborating upon the mechanisms of how informal institutions can be leveraged to capture value from firms’ patent portfolios.

By introducing diversity of ownership interests via “mixed-ownership reform”, China seeks to alleviate internal governance problems in state-owned enterprises (SOEs), enhancing their efficiency and competitiveness. Private strategic partners invest for a large minority stake, with government typically retaining a majority share and influence. Resulting questions related to strategic leadership and corporate governance, addressed in this paper from the perspective of principal-agent theory, include: To what extent do the board chairs of SOEs affect their financial performance? How is this relationship impacted by the institutional changes induced by mixed-ownership reform? Do these effects vary between SOEs operating in competitive and monopolistic industries? Analyzing data on Shanghai- and Shenzhen-listed SOEs from 2008 to 2017 using the multilevel linear model (MLM) method, we determine that board chairs have a noticeable effect on financial performance, varying by type of SOE, and that mixed-ownership reform reduces their impact.

Can state governance spur firm innovation in an emerging economy and transform state-owned enterprises (SOEs) from “dying dinosaurs” to “dynamic dynamos”? We seek an answer to this question by investigating the innovative performance of restructured SOEs in China’s high-speed train sector. We expect that SOE restructuration will improve firm innovation, but that the degree of improvement will depend on how the state conducts firm governance. Building on institutional theory, we distinguish state governance via equity ownership and administrative affiliation in an emerging economy with market-hierarchy institutional conflicts. Under such conflicts, restructured SOEs experience institutional logic dissonance, which hinders organizational change for technological innovation. We hypothesize that state ownership exacerbates institutional logic dissonance at a restructured SOE, thus limiting innovation improvement from restructuration; in contrast, state affiliation mitigates firm dissonance and hence augments such improvement. We find empirical evidence for these hypotheses in a comprehensive panel of high-speed train manufacturers in China between 1989 and 2015. This study contributes to the institution-based theory of technological innovation in emerging economies. On the practical front, our findings suggest that emerging states may adopt arms-length governance to spur SOE innovation and unleash these dynamic dynamos to fuel sustainable economic growth.

Recent events involving Chinese technology firm Huawei and its role in the global 5th Generation (5G) telecommunication standard, as well as the role of the Chinese government in shaping the technology competition, have pushed the issue of public–private collaboration to the headline. To offer improved understanding about this issue of profound implication for research and practice, we trace the trajectory of a previous public–private collaboration and investigates the disruption and restructure of a technology ecosystem. The standardization of China’s TD-SCDMA technology reveals that (1) a network has a more centralized structure at its inception; (2) intercohesion increases and structural folds facilitate knowledge generation and disruptive innovation in the orchestration phase; (3) in the embedded phase, the public institutions’ status generally remained stable. Essentially, the government empowers various institutions to form a strategizing group, and leads this group across the disruption and reconfiguration of the industrial network.

Universities in China have increased their entrepreneurship significantly, yet a good understanding of the specific characteristics of university-based technology transfers remains missing. This study focuses on a special type of university spinoffs in China, University-Run Enterprises (UREs), and examines how URE eminence contributes to a university’s technology transfer performance, using panel data covering 195 universities over the five years from 2002 to 2006. The findings reveal that URE eminence not only signifies a university’s strong entrepreneurial culture, but also signals commercial values and quality of the university research. It moderates the contribution of university scientists from the supply side and that of sourcing firms from the demand side.

This study examines the varying roles of power, status, and national culture in unethical decision-making. Most research on unethical behavior in organizations is grounded in Western societies; empirical comparative studies of the antecedents of unethical behavior across nations are rare. The authors conduct this comparative study using scenario studies with four conditions (high power vs. low power × high status vs. low status) in both China and Canada. The results demonstrate that power is positively related to unethical decision-making in both countries. Status has a positive effect on unethical decision-making and facilitates the unethical decisions of Canadian participants who have high power but not Chinese participants who have high power. To explicate participants’ unethical decision-making rationales, the authors ask participants to justify their unethical decisions; the results reveal that Chinese participants are more likely to cite position differences, whereas Canadian participants are more likely to cite work effort and personal abilities. These findings expand theoretical research on the relationship between social hierarchy and unethical decision-making and provide practical insights on unethical behavior in organizations.

Our country’s equipment manufacturing industry ranks among the best in all developing countries, but compared with developed countries, there is still a long way to go. It is not only the backwardness of various technologies, but also the interference of other countries. Although our country’s equipment manufacturing industry is not as advanced as the advanced technology of developed countries, we still have to stick to our original aspirations, do not underestimate ourselves, and be good at absorbing and learning from the strengths of others to make up for our own weaknesses. While not working behind closed doors and while absorbing technology from other countries, we can make use of our strengths to make up for our weaknesses and develop our own industrial technology. This paper studies the evolution trend of innovation network structure and at the same time studies the evolution mechanism of advanced equipment manufacturing innovation network structure from the perspective of complex systems. The explained variable in this article is green total factor productivity. The variable adopts the Malmquist–Luenberger global super-efficiency index model. There are two main explanatory variables. One is the heterogeneity that affects the efficiency of industrial evolution, including factor heterogeneity, structural heterogeneity, and environmental heterogeneity, and the other is the interaction term of equipment manufacturing specialization agglomeration degree dummy variable multiplied by factor heterogeneity. The regional economic development level is added to the model as a control variable. In the selection of measurement indicators, the per capita GDP is used as the control variable. The experimental results show that each sample is tested in pairs, and the standard error level of the mean is 0.018, which is less than 0.05, indicating that the efficiency of the equipment manufacturing industry’s economic correlation spatial network has a significant impact on the overall economic development level of the industry. The reduction in spur helps to increase economic output.

The literature has posited that agglomeration economies and the formation of social relationships resulting from the geographic concentration of incumbents constitute the forces that “pull” new entrants into industry clusters. However, this proposition overlooks how the collective action of incumbents in pursuit of their own benefits affects new entrants. This study examines how business associations as collective action organizations established by incumbents to promote and safeguard group-wide interests contribute to de novo entrants. The empirical evidence from Canada’s telecommunication equipment manufacturing industry between 1995 and 2005 reveals that the prevalence of local business associations encourages de novo entrants. However, the impact is curvilinear such that excessive collective action on the part of local fellow incumbents can create a clubby environment and “push” new entrants away.

As the economy has been becoming more knowledge-based and the process of globalization has been accelerating, patent portfolio has become an important aspect of key competitive advantages. Patents make great contributions for firms to protect and benefit from their innovation and are essential for firms’ competence, survival, and development. Previous research has studied patent strategy by scholars of different disciplines from different perspectives. However, an integrated and consistent theoretical framework has not been developed on how firms could initiate suitable patent strategies which fit the dynamic environment. In order to improve the theoretical framework of patent strategy and provide a theoretical basis for firms’ patent management practice in China, by searching and reorganizing literature in recent 10 years, this paper conducts a literature review on the choice of patent strategy including whether to adopt patents to protect innovation and how to leverage patents to generate value from the perspective of strategic fit. We focus on the fit between patent strategy and micro environment, meso environment, and macro environment. We integrate the recent development of patent strategy literature, grasp the research frontier, and construct a theoretical framework on firm patent strategy. This paper holds theoretical implications for patent strategy research by integrating ideas in the literature and giving a consistent framework, and also has practical implications for firms’ patent management practice. Furthermore, based on the literature review, we suggest that future research should put more attention on the following aspects. First, research on patent operation should be extended. Second, since prior research mainly focused on developed economies, future research should study patent strategy in transition economies. Third, patent strategy literature should be expanded by providing insights on micro level mechanisms. Fourth, since prior research ignored the impact of networks on patent strategy, scholars should study patent strategy from the social network perspective. Fifth, cross-level research may extend patent strategy research by integrating factors from the macro, meso, and micro level. Finally, considering the dynamic essence of patent strategy, more dynamic research is needed to improve our theoretical understanding of patent strategy.

The conventional explanation of the geographic concentration of economic activities attributes the persistence of industry clusters to the local agglomeration externalities within each cluster. By overemphasizing local agglomeration externalities, the existing literature essentially treats clusters as separate and isolated entities and thus risks overlooking competitive and collaborative dynamics across clusters. We argue that the spatial distribution of an industry matters as well because regional competitiveness is affected not only by its local agglomeration externalities but also by the agglomeration externalities in nearby clusters. Furthermore, to complement previous agglomeration research, which tends to take a static view, the impact of spatial distribution on regional competitiveness is examined across two stages of the industry life cycle. The findings from a longitudinal study of Canada’s telecommunication equipment manufacturing industry reveal that being close to strong agglomeration externalities in other places increases a place’s ability to create more new ventures when an industry grows but decreases a place’s ability to sustain existing firms and its ability to create more new ventures when an industry shakes out.

In this study, we contend that the corporate spin‐off’s entrance into a market is strongly conditioned by a strategic logic tied to its legacy history. Unencumbered by this logic, de novo entrants have at least two potential advantages. They learn differently, and they do not face the challenge of unlearning. We test our hypotheses in the context of a major shift in rules for drug approval in the pharmaceutical industry. The results show de novo entrants choose market options that were less connected to past decisions, while entrants with a tie to legacy firms shift less from their initial position. In addition, de novo entrants entered market areas that were less densely populated, as compared to corporate spin‐off entrants, which is evidence of a tendency for de novo entrants to avoid direct competition while corporate spin‐offs seek legitimacy through mimicry.

Chinese companies are increasingly pursuing acquisitions from developed economies (DE) with varying degrees of success. Because of their late-comer and emerging-economy (EE) status, Chinese firms are often perceived as having less legitimacy than the firms they are acquiring. In this study, we examine how Chinese companies’ deal with this legitimacy imbalance by investigating five cases where Chinese firms acquired firms from more developed economies. We find that there is a difference in internal and external legitimacy vis a vis internal and external stakeholders, and that their relative importance changes over the course of the merger process. External legitimacy is more important in the pre- and during- merger stages, while internal legitimacy plays a more important role in the post- merger stage. In addition, we find that during the three stages of the merger process, Chinese MNEs utilize various strategies in an attempt to address the legitimacy imbalance when entering a developed economy, such as relationship building, cooperation with co-investors, allowing the acquired company to operate independently in the first few years, and operational commitment. We discuss the implications of these findings for researchers and practitioners and suggest future research directions.

This study examines how dependence asymmetry and joint dependence affect the performance of less-powerful organizations in alliances in China’s emerging market. Based on a sample of 1,127 strategic alliances between Chinese publicly listed firms, the authors found that, unlike the conventional wisdom that the dependence-advantageous firms are typically the winners in western economies, the dependence-disadvantageous firms actually benefit from asymmetric alliances in China’s sociocultural and business environment. This positive impact is further channeled by high joint dependence. In addition, partnering with firms in unrelated business areas is beneficial for the disadvantaged organizations. This research extends the interdependence mechanisms to a different sociocultural context and contributes to the literature by examining it as a condition for value creation versus value appropriation

This article reviews and evaluates major theories of leadership and summarizes findings from empirical research on leadership. Major topics and controversies include leadership versus management, leader traits and skills, leader behavior and activities, leader power and influence, situational determinants of leader behavior, situational moderator variables, transformational leadership, importance of leadership for organizational effectiveness, and leadership as an attributional process. Methodological issues in leadership research and implications for improving managerial practice are discussed also. An integrating conceptual framework is presented to show how the different theories and lines of research fit together.

Although many research has been done to understand the consequence of network structure on performance at the firm level, we have limited knowledge regarding how network structures influence alliance performance and how they interplay with partner attributes in this process. Focusing on the venture capital (VC) syndicate networks, we argue and show evidence for the positive influences of internal network density and external network structural hole on the performance of the investee startups. Moreover, we investigate how the features of lead and non-lead VC firms interact with the two network structural variables. The findings suggest that a big syndicate team augments the benefits of cooperation and coordination from a dense internal network, but a lead VC firm with high network status strengthens the information benefits from a high level of external network structural holes. Our cross-level research offers important implications on partner selection in strategic alliance research and the roles of lead and non- lead VC firms in VC studies.

Extant research provides ambiguous views on the network adaptability of existing ventures and new ventures during environmental change. Applying an institutional perspective, this research aims to provide a clearer picture by comparing the adaptation and network configurations of existing vs. new entrepreneurial cohorts during China’s institutional change after 1992. The qualitative and quantitative analyses show that the existing cohort of entrepreneurs displays network inertia, in that they largely maintain strong tie‐based political and market networks; the new cohort instead demonstrates better adaptation by establishing fewer political networks but more weak and diverse market networks. This comparative research unpacks the institutional mechanisms underlying such differences, and serves as a ground for future investigations dealing with the strategic actions of different entrepreneurial cohorts that are largely neglected in previous studies. Copyright © 2014 John Wiley & Sons, Ltd.

Using empirical evidence gathered from Chinese listed companies, this article explores the relationship between micro-governance mechanisms and corporate philanthropy from a corporate governance perspective. In China’s emerging market, ultimate controlling shareholders of state-owned enterprises (SOEs) are reluctant to donate their assets or resources to charitable organizations; in private enterprises (PEs) marked by more deviation in voting and cash flow rights, such donations tend to be more likely. However, the ultimate controllers in PEs refuse to donate assets or resources they control or own, which implies that corporate philanthropy by PEs comes at the cost of others, through assets or resources owned by minority shareholders. Even after devastating natural disasters such as the 2008 Wenchuan Earthquake, the controlling shareholders continue to express reluctance to donate any assets they control. Despite widespread evidence that corporate philanthropy boosts corporate growth and profitability, these ultimate controllers indicate no intention to donate their own money as a means to improve corporate performance.

Several activities are required for successful supply chain management. One key activity is the coordination that takes place between firms in a supply chain. Two antecedents to coordinative behavior of firm A with firm B in a supply chain is the trust that firm A has in firm B (interorganizational trust) and firm A’s dependence on firm B (interorganizational dependence). In addition, this paper includes the interpersonal trust of key boundary-spanning employees from firm B by key boundary-spanning employees from firm A (interpersonal trust). We posit that the interorganizational trust mediates interpersonal trust with the outcome of interfirm coordination yet also serves as moderator of the impact of interorganizational dependence on coordination.

This study contributes to the bonding–bridging debate in the social capital literature by examining the conditioning effects of collective social capital. Data generated from simulation reveals that network density, a measure of network–level social capital, negatively moderates the impacts of firm–level social capitals, measured separately by degree centrality and structural hole, on a firm’s innovation performance. Specifically, in low–density networks, degree centrality and structural holes are complementary at enhancing innovation performance. In high–density networks, the positive impact of degree centrality weakens and structural holes turn out to be detrimental. The findings not only advance our understanding of the cross–level dynamics of social capital, but also provide a possible explanation for the mixed empirical results found in previous studies.

Existing studies have been inconclusive on whether and the extent to which gendered social networks contribute to the gender gap in business performance. Drawing on a random sample of Chinese Canadian entrepreneurs, this research examines the nexus of social networks, Internet use, and the gender gap in business performance. Results reveal a marked gender difference in firm size, which becomes narrowed after social networks, voluntary association participation, Internet use, and business characteristics are controlled. More important, network composition and structural position have different implications for men and women entrepreneurs. Men are more effective in converting relational advantages into business advantages. Interaction effects suggest that kin homophily hurts women’s business performance but not men’s. Yet, women gain more from participating in transnational entrepreneurship.

The existing literature emphasizes the impacts of agglomeration economics on a place’s regional competitiveness, but overlooks the spatial distribution of an industry across places. We argue that a place’s competitiveness is also affected by its spatial distance to other places where firms cluster. A longitudinal study of Canada’s telecommunication equipment manufacturing industry reveals that neighboring agglomeration economics contribute positively to new venture creation but negatively to the survival of existing firms in a municipality.

Why do multinational corporations (MNCs) frequently encounter corporate social responsibility (CSR) crises in leading emerging markets in the new century? Existing research about institutional impacts on MNC CSR has developed a void-based account about how the flawed institutional system allows misdeeds to happen. But the fact that such misdeeds have turned into increasing CSR crises in the new century along with institutional change is rarely taken into account. This paper combines studies of institutional voids, institutional entrepreneurship, and stakeholder theory to develop a concept of institutional sophistication, which refers to both the top-down maturation of the regulatory system that standardizes firm behavior and the bottom-up diversification and intensification of grassroots initiatives that redefine stakeholder membership. Based on this concept, we developed a framework to comprehensively demonstrate how both institutional voids and sophistication drive the MNC CSR crisis in leading emerging markets. Empirically, we established an original database that includes 309 publicized CSR crises encountered by major foreign MNCs in China, India, and Russia, 2000–2011. Through a content analysis, the paper reveals six common sophistication processes that drive the MNC crisis across contexts and also specifies stakeholder strategies that make these processes happen and vary by social problems and national contexts. We also discussed the value of studying corporate social irresponsible behavior in understanding the institution–MNC relationship.

Prior research on firm behavior in emerging economies like China has highlighted the extensive building and use of political ties by business managers. However, there are mixed findings regarding the value of political ties on firm performance. In this study, we propose a task-contingency approach to explain when the investment in political ties will improve performance and when they will not. In particular, we study how the value of investing managerial time to cultivate political ties with local government officials may vary when firms engage in different types of technological innovation activities. We hypothesize that when a firm pursues exploratory innovation involving high institutional uncertainty, such time investment will improve firm performance. In contrast, when a firm undertakes exploitative innovation that involves low institutional uncertainty but requires high internal operational improvement such as marketing and sales, such time investment in political ties would distract managers’ attention from internal improvement, and hence may harm firm performance. Results based on a World Bank survey of 1,500 Chinese manufacturing firms confirm these hypotheses. Our findings offer fresh insights on how firm managers in emerging economies should manage their institutional environment when pursuing innovation activities.

When do less-powerful firms interact with more-powerful firms in alliances? This article examines the effects of the mechanisms of dependence asymmetry on the performance of less-powerful firms in asymmetric strategic alliances. The current literature provides different logics and theoretical bases to explain the effects of dependence asymmetry; however, these explanations are primarily from the perspective of value appropriation. We discuss the effects by incorporating both value appropriation and value creation and include the alliance portfolio and business relatedness as contingencies to explain how to dance with wolves. Testing our hypotheses on a sample of strategic alliances between Chinese publicly-listed firms from 2002 to 2007 we find that dependence-disadvantaged firms actually benefitted from asymmetric alliances, especially when there was less relative dependence or when their businesses were unrelated to those of their alliance partners.

The study examined the impact of spatial relationships on firm performance. It also assessed the impacts of network structural and relational characteristics on performance, as well as the moderating effects of these variables on the spatial relationship to performance linkages. The sample comprised 252 firms located in a mold industry cluster in the hejiang province of hina. Both in‐cluster ties and extra‐cluster ties positively impacted performance. However, the effects of distant ties were more pronounced. Tie stability had a positive effect whereas tie quality had a negative effect on performance. Network centrality, tie strength, and tie stability strengthened the relationship between in‐cluster ties and performance. By contrast, all network tie characteristics weakened and changed the form of the relationship between extra‐cluster ties and performance. The findings suggest the need for cluster firms to consciously cultivate distant linkages in their network ties in order to neutralize the tendencies for lock‐in and to arrest entropic deterioration in their respective clusters.

Entrepreneurial firms are argued to struggle between being different and being the same. To join the debate, we asked this question: How can entrepreneurial firms in a geographically concentrated locale gain both competitive advantage and legitimacy, given the competitive pressures for differentiation and the institutional pressures for conformity? Drawing from the network perspective, we conducted the research in a furniture cluster in Southwestern China. Based on qualitative and quantitative data, we found that peripheral firms tended to be institutionally and competitively isomorphic, while central firms could avoid the tradeoff between institutional conformity and competitive differentiation by creating and using their networks to innovate and at the same time to shape the institutional environment.

The transformation of state‐owned enterprises (SOEs) into efficient entities has been an important approach in transition economies. However, the transition literature reveals little about how control structure affects firm performance of transformed SOEs. Drawing on agency theory, we distinguish three modes of control in transformed SOEs: state‐controlled, dispersedly controlled, and privately controlled modes and argue that actual control after transformation plays a critical role in determining performance. Examining the impact of different control modes in China, we find that the key is who controls the transformed firm. Non‐state‐controlled (dispersedly controlled and privately controlled) firms are more likely to have enhanced post‐transformation performance and reduced agency costs than state‐controlled firms.

Although not frequently regarded as controversial, digital communications industries continue to be sites of CSR conflicts, particularly internationally. Investigating CSR issues in the digital communications industry is pertinent because in addition to being one of the fastest growing industries, it has created a host of new CSR issues that require further attention. This case study examines an incident in early 2010, when Google Inc. China and the Chinese government reached an impasse that produced a large-scale, transnational conflict that reached a head ostensibly over state-mandated censorship, ultimately prompting Google to withdraw from the mainland Chinese market and redirect its activities to Hong Kong. We track Google’s experience in China, both to explore its strategies and to consider the implications for corporate social responsibility. We situate Google’s drastic decision to withdraw entirely from mainland China in the complex multiplicity of ethical, cultural, and political conflicts that affect this particular case. On a broader level, the incident raises the question of how multinational corporations (MNCs) can achieve corporate growth while negotiating the highly sensitive sociopolitical and institutional environments of foreign nations.

The literature has posited that agglomeration economies and the formation of social relationships resulting from the geographic concentration of incumbents constitute the forces that “pull” new entrants into industry clusters. However, this proposition overlooks how the collective action of incumbents in pursuit of their own benefits affects new entrants. This study examines how business associations as collective action organizations established by incumbents to promote and safeguard group-wide interests contribute to de novo entrants. The empirical evidence from Canada’s telecommunication equipment manufacturing industry between 1995 and 2005 reveals that the prevalence of local business associations encourages de novo entrants. However, the impact is curvilinear such that excessive collective action on the part of local fellow incumbents can create a clubby environment and “push” new entrants away.