Global networks as a mode of balance for exploratory innovations in a late liberalizing economy

Zaheer Khan, Rekha Rao-Nicholson, Shlomo Y. Tarba

    Research output: Contribution to journalArticlepeer-review

    32 Citations (Scopus)

    Abstract

    This article suggests that under weak institutional arrangements, adverse economic conditions, and institutional voids in a late liberalizing economy, local firms that are part of the global value chains of multinational enterprises develop international networks as a balancing strategy to engage in exploratory innovations. We argue that local firms do so in order to counter the negative influences of local institutions on exploratory innovations. Using exploratory in-depth qualitative analysis, we study the suppliers of motorcycle parts in Pakistan that are working with leading Japanese and Chinese motorcycle assemblers. The results suggest that in adverse economic situations local institutional factors can sustain only the development of exploitative innovations. As a balancing strategy, motorcycle part suppliers develop international networks with global Tier 1 suppliers, international trade fairs, and international institutions. This strategy helps circumvent the negative influence of home institutional factors on developing exploratory innovations. Our study highlights the importance of global networks as a balancing strategy for creating exploratory innovations by firms in a late liberalizing economy.

    Original languageEnglish
    Pages (from-to)392-402
    Number of pages11
    JournalJournal of World Business
    Volume53
    Issue number3
    DOIs
    Publication statusPublished - Apr 2018

    Keywords

    • Context
    • Exploitative innovations
    • Exploratory innovations
    • Institutions
    • International networks
    • Late liberalizing economy
    • Motorcycle industry
    • Pakistan

    ASJC Scopus subject areas

    • Business and International Management
    • Marketing
    • Finance

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