Abstract: Due to the lasting impact of low cost strategy, performance oriented culture prevails among Chinese firms, but whether it can promote innovation has been controversial. Based on the behavioral theory of the firm, our study analyzes the different influence of performance orientation culture on exploration and exploitation. Based on a questionnaire survey of 115 firms from high-tech industry clusters in Hubei Province, we find that performance orientation culture can promote the development of exploitation rather than exploration, but in the highly competitive market, performance orientation culture can bring exploration. The centralized structure of the enterprise will weaken the role of performance orientation culture in promoting innovation. This study is important for the understanding of the role of performance orientation culture in innovation behavior.

Key words: performance orientation, explorative innovation, exploitative innovation, competitive intensity, centralization