Publication Type

Book Chapter

Version

publishedVersion

Publication Date

11-2016

Abstract

Integrating the insights from both institutional theory and economic geography, we develop a new conceptual framework to explain how formal and informal institutions in developing countries influence knowledge exchanges within and across geographical locations, thus affecting entrepreneurs’ and firms’ innovative behaviors and outputs. We suggest that the prevalence of informal institutions in developing countries increases the importance of geographic proximity for knowledge exchanges. At the same time, informal institutions provide alternative channels for maintaining non-local social interactions that facilitate knowledge exchanges among geographically distant firms. Using China as the context, we provide theoretical propositions that illustrate these mechanisms in terms of the different innovative behaviors between domestic Chinese firms and multinational companies operating in China. This article provides a fresh perspective on how the geography of innovation is embedded in institutional environments. It enriches the literature by highlighting the important role of informal institutions in influencing innovation and how firms, especially entrepreneurial ones, vary their innovative behaviors depending on the extent of their embeddedness in the informal institutions.

Keywords

Informal institutions, Geography of innovation, Knowledge spillovers, Non-local social interaction, Multinational enterprises (MNE), Entrepreneurship

Discipline

Entrepreneurial and Small Business Operations | Technology and Innovation

Research Areas

Strategy and Organisation

Publication

Global Innovation and Entrepreneurship: Challenges and Experiences from East and West

Editor

Stephen E. Little, Frank M. Go, Teresa Shuk-Ching Poon

First Page

61

Last Page

78

ISBN

9783319438597

Identifier

10.1007/978-3-319-43859-7_4

Publisher

Springer

City or Country

Cham

Additional URL

https://doi.org./10.1007/978-3-319-43859-7_4

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