Institution, strategy, and performance: A co-evolution model in transitional China

What is it about?

Despite a complex and sometimes conflicting environment, Chinese firms have grown quickly over the last two decades. The explanations for this have tended to focus on either government support or the adoption of a strategy of imitation. Using case study of Geely Group, a leading private carmaker in China, this paper develops a co-evolution model for both the institutional and the strategic environment that provides a powerful and more specific account of why firms grow so fast.

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Why is it important?

We develop a co-evolutionary framework to explain the rapid growth of firms in transition economies. In contrast to previous work, our research provides a new mechanism through which managerial intentionality can be expressed. Similarly previous studies have assumed that the role of the government is unidimensional, homogenous, and static; our study shows that the effects of a government's actions are complex, firm specific, and dynamic.