Guanxi (i.e. connections), a source of innovation resources of SMEs——The mediating effect of customer co-creation

LIU De-Sheng; XIE Ming-Lei; ZHANG Lu-Xiu

Science Research Management ›› 2022, Vol. 43 ›› Issue (11) : 134-142.

Liu Desheng¹, Xie Minglei², Zhang Luxiu³

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Abstract

With the development of information technology and the advent of the customer-centered era, the traditional paradigm of new product development is gradually replaced by the customer co-creation paradigm. Customers are no longer passive product recipients, but they play an important role in new product development. In other words, customers play more and more important roles in the process of new product development. For small and medium-sized enterprises, it is particularly important to adapt to new changes for their innovation. However, there is lack of enough discussion about the logic of the impact of customer co-creation on product innovation, and there is limited number of literatures on the difference of the effect of Guanxi on innovation of different scale enterprises. Therefore, it is necessary to further explore why Guanxi could benefit or diminish innovation in SMEs, that is, what kind of consequences Guanxi will have on innovation. This should consider whether Guanxi can bring valuable resources, but also how to integrate these resources with the existing resources of the enterprise. Based on the hypothesis that Guanxi is the real source of innovation resources of SMEs, the paper developed a moderated mediating effect model to study the influence of different dimensions of Guanxi - Ganqing, Renqing and Xinren (GRX) and the mediating effect of customer co-creation on new product innovation of SMEs. Using the survey data of 274 manufacturing SMEs in Yangtze River Delta and Pearl River Delta, the paper empirically testes the direct effect of Guanxi on SMEs innovation and the mediating role of customer co-creation on SMEs innovation using the classical linear regression model. The results show that the three dimensions of Guanxi can not only promote the new product performance of SMEs directly, but also influence it indirectly through the mediating effect of customer co-creation. Moreover, the paper also reveals the moderating effect of dynamic environment on Guanxi and SMEs innovation using the hierarchical regression model. In addition, the paper found that the dynamic environment positively moderates the relationship between customer co-creation and the performance of new products. In order to the robustness of the above results, the paper carries the supplementary tests of Sobel-Goodman and Bootstrap. These findings are not change. In general, after robustness tests, the results between Guanxi and SMEs innovation are still supported.
The main conclusions of this paper are as follows. Firstly, from the three dimensions of Guanxi - Ganqing, Renqing and Xinren, the paper discusses the impact of Chinese-style Guanxi on SMEs innovation. The empirical results show that the three dimensions of Guanxi- Ganqing, Renqing and Xinren have a significant positive impact on SMEs innovation, which shows that Guanxi can enhance the new product development ability of SMEs, shorten the time to market for new product, and improve the ability of new product development. Secondly, customer co-creation plays the partial intermediary role between Ganqing, Renqing, Xinren and SMEs innovation, which shows that SMEs can not only obtain a lot of information about market demand, but also make use of customers′ technical and knowledge. At the same time, the interaction between SMEs and customers also enables them to generate more effective solutions through deep participation of customers in the innovation process, so as to improve the innovation performance. Thirdly, dynamic environment is a situational factor that affects the SMEs innovation. When the external environment is volatile, the change of market demand and the speed of technological upgrading will faster, and the relationship between customer co-creation and SMEs innovation will be strengthened.
This paper studies the impact of three dimensions of Guanxi- Ganqing, Renqing and Xinren on SMEs′ innovation, and reveals its internal mechanism by analyzing the intermediary/moderating role of customer co-creation. These results will improve the understanding of the importance of Guanxi resources to SMEs′ innovation, expand the research scope of customer co-creation theory, and provide practical guidance for SMEs′ new product innovation.
Specifically, the main practical enlightenment includes three points. Firstly, SMEs can obtain external innovation resources by rational use Guanxi, including market demand information and technological innovation resources for new product development, so as to alleviate the shortage of their own innovation resources and improve their new product performance. Secondly, external resources do not necessarily enhance the innovation efficiency of SMEs. SMEs need to improve the management process of customer co-creation, effectively integrate market demand information and technological innovation knowledge to increase good new product development performance. Thirdly, SMEs need to pay more attention to the impact of external environment on innovation. The faster the market demand changes and the technological change, the more SMEs need to improve the management process of customer co-creation, enhance the interaction in the process of innovation, and attract more customers to participate in the development of new products, so as to produce more effective demand solutions.
Additionally, based on the quality of the dual relationship between executives and customers, the paper discusses the role of Guanxi on innovation and refines the antecedents of relationship from organizational performance to innovation performance, which contributes to the research depth of innovation theory. This paper also reveals the mechanism of Guanxi promoting innovation of SMEs, and enriches the research on Guanxi and innovation from the perspective of customer co-creation.

Key words

guanxi / customer co-creation / innovation resource / small and medium-sized enterprise (SME) / new product performance

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Liu Desheng, Xie Minglei, Zhang Luxiu. Guanxi (i.e. connections), a source of innovation resources of SMEs——The mediating effect of customer co-creation[J]. Science Research Management. 2022, 43(11): 134-142

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