Picturing firms' institutional capital-based radical innovation under China's institutional voids

This study provides an institutional framework to interpret firms' resource management in China. We identify the formal and informal institutional capital that firms acquire via their relational network and solicit from the government, and their distinctive effects on firms' radical innovation. We address how firms' utilization of the formal and informal institutional capital would be influenced by their multi-level contexts (local context, market context, and organizational context). Using a survey data from 280 Chinese high-technology firms, we find that firms' informal institutional capital has a higher positive effect on firms' radical innovation than the formal institutional capital does. The effects of firms' formal institutional capital on radical innovation would be higher in the complex market, and for the state owned enterprises, whereas the effect of firms' informal institutional capital on radical innovation would be higher in the developed provinces but lower in the complex market.