The cultural roots of compositional capability in China: balanced moderation
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The cultural roots of compositional capability in China: balanced moderation Steven Shijin Zhou 1 & Peter Ping Li 1,2,3 & Abby Jingzi Zhou 1 Shameen Prashantham 4
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# Springer Science+Business Media, LLC, part of Springer Nature 2019
Abstract A large number of Chinese firms lack the resources for having competitive advantages. Under this severe constraint, such firms are forced to find new paths toward developing certain competitive advantages, including the ability to combine ordinary resources into novel competitive advantages, which is referred to as compositional capability. Such a special capability underlying novel competitive advantages is related to certain cultural factors, such as the Chinese cultural tradition in the case of China. However, the potential links between compositional capability and the Chinese cultural tradition remain poorly understood and largely unspecified. This paper responds to the call for more research on identifying relevant cultural factors by explicating the inherent connections between compositional capability and the Chinese cultural value of balanced moderation. Keywords Compositional capability . Cultural root . Balanced moderation . China
Introduction A large number of Chinese firms have succeeded in creating novel competitive advantages from their severe lack of resources in the dynamic context of China (Luo & Child, 2015; Zhu, Wittmann, & Peng, 2012). As the composition-based view (CBV) suggests (Luo & Child, 2015: 389), many Chinese firms are particularly good at leveraging ordinary resources to produce extraordinary results by applying compositional capability, which refers to the extent to which firms are “able to synthesize and integrate disparate resources, including the open resources available to them.” Hence, these firms are able to achieve an effective balance between imitation and innovation and between cost and value for high value-price ratios by combining ordinary resources into extraordinary competitive advantages, parallel to the macro-level transformation of
* Abby Jingzi Zhou [email protected] Extended author information available on the last page of the article
S. S. Zhou et al.
China from a low-cost manufacturing base to a high-value innovation economy (Luo & Child, 2015; Keane, 2007; Kim, 1997; Koh, 2000; Meyer, 2008). However, while the CBV sheds useful light on how compositional capability helps in shaping compositional competition and orchestrating compositional offerings, an interesting but underexplored aspect of the CBV pertains to its cultural roots. Institutions (both formal and informal) play important roles in shaping the capabilities of firms (Peng & Heath, 1996; Peng, Lee, & Wang, 2005). This paper adopts the perspective of viewing culture as a part of informal institutions and attempts to explore its role in influencing the compositional capability of firms in China. Although Luo and Child (2015) suggest that the compositional capability of Chinese firms is to some extent related to the Chinese cultural tradition, the spe
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