2c 01 Dinda Zatira. Business Partnership

Commercial partnerships and
collaborative innovation in China: the

moderating effect of technological
uncertainty and dynamic capabilities
Hao Jiao, Jifeng Yang, Jianghua Zhou and Jizhen Li
Abstract Hao Jiao is based at Beijing

Purpose – The purpose of this study is to empirically investigate the extent to which two types of commercial Normal University, Beijing,
partnerships (business partner and non-business partner) affect the collaborative innovation of firms in China. Jifeng Yang and
emerging economies. Specifically, the roles of two commercial partnerships are investigated. Additionally, the Jianghua Zhou are both
study explores the moderating effect of external technological uncertainty and internal dynamic capabilities on based at Business School,
the relationship between two commercial partnerships and on collaborative innovation.
Beijing Normal University,
Design/methodology/approach – Using a sample of 370 high-tech firms in China, the authors applied
Beijing, China. Jizhen Li is
the partial least squares structural equation modeling approach to model these relationships.
based at the School of
Findings – The findings reveal opportunities and challenges for companies according to two intensities of
Economics and
commercial partnership for collaborative innovation. The partnership contribution to innovation and
competiveness is different within the two routes and ranges. The findings indicate that (1) intense Management, Tsinghua
commercial relationships with business partners have a stronger positive significant impact on collaborative University, Beijing, China.
innovation than those with non-business partners and (2) non-business partners have a weaker
positive impact on collaborative innovation at high external technological uncertainty. It was also found that
(3) the positive impact of business partners on collaborative innovation is weakened when a firm has high
dynamic capabilities, whereas the positive impact of non-business partners is strengthened.
Research limitations/implications – Insight into the roles of two commercial partnerships in achieving
collaborative innovation facilitates the advancement of the theoretical understanding of the
circumstances under which cooperative innovation can be more effective under different partnerships.
Originality/value – A key strategic question is whether comprehensiveness enables firms to make better
strategic decisions in various environments. In the process of innovation, companies must choose
different types and quantities of partners, and they must regulate their partners’ innovative behavior by
establishing a corresponding network structure and relationship rules. The current study focuses on
analysis of how different intensities of commercial partnerships affect collaborative innovation. This
Received 29 October 2017
research provides a theoretical framework that creates a new classification of commercial relations with Revised 26 July 2018
regard to collaborative innovation, and it highlights the difference between the two types of partnerships. 29 January 2019
This study finds that there are many problems in the selection of innovative partners in China’s high-tech 21 April 2019
companies. Therefore, companies should strengthen their understanding of cooperative innovation, and Accepted 22 May 2019
they should build and manage highly efficient innovation networks. This study helps companies, high- The authors are indebted to
tech industry associations, academia and government to take enhanced, informed actions. Prof Manlio Del Giudice, Prof
Shlomo Tarba and anonymous
Keywords Dynamic capabilities, Collaborative innovation, Commercial partnership,
reviewers for their many con-
Technological uncertainty structive insights and sugges-
Paper type Research paper tions. The research was
supported by the National
Natural Science Foundation of
China (71572017; 71843010;
1. Introduction 71772014) and the MOE
Project of Key Research
In recent decades, there has been unprecedented growth in corporate partnering and Institute of Humanities and
Social Sciences at Universities
reliance on various forms of external collaboration (Hagedoorn and Schakenraad, 1992; (17JJD630003).
DOI 10.1108/JKM-10-2017-0499 VOL. 23 NO. 7 2019, pp. 1429-1454, © Emerald Publishing Limited, ISSN 1367-3270 j JOURNAL OF KNOWLEDGE MANAGEMENT j PAGE 1429
Morris and Hergert, 1987). And organizations can no longer be isolated entities in the
dynamic environment (Santoro et al., 2018). Consequently, collaborations are critical for a
firm’s innovation (Lin, 2003). The most common rationales offered for collaborative
innovation involve some combination of risk sharing, obtaining access to new markets and
technologies, hurrying products to market and pooling complementary skills (Eisenhardt
and Schoonhoven, 1996; Hagedoorn, 1993; Kogut, 1989).
The field of economics has shown growing interest in the analysis of partnerships and
innovation performance (Bougrain and Haudeville, 2002; Huang and Yu, 2011; Knoben,
2009). Most of these studies note the importance of partnerships for innovation. Several
studies are devoted to identifying the determinants of collaborative innovation at the
partnership level. The existing literature tends to categorize different types of partnerships
in collaborative innovation from the perspective of the knowledge-based view (Grant, 1996;
Kogut and Zander, 1992; Nonaka, 1988) – for example, partners’ positions in the knowledge
chain and contextual knowledge distance (Un and Asakawa, 2015) and whether partners’
knowledge is science-based or market-based (Du et al., 2014; Faems et al., 2005). Others
have also categorized partners based on their cooperative motivation characteristics
(Hagedoorn, 1996).
However, those studies do not provide an integrated framework for contrastive analysis of
the impacts of types of partners with different commercial intensities on collaborative
innovation, leaving a critical research gap. Hence, we place the two in a holistic framework
and seek to understand how business partners and non-business partnerships affect
collaborative innovation and explore the differences in their effects. Business partnerships
can be further divided into horizontal competing companies and vertical upstream and
downstream companies (suppliers and customers). Non-business partnerships include
relationships between firms and research organizations (ROs; universities and
technological institutions), government, consulting companies and industry expositions.
The prior literature on collaborative innovation that examines the direct effects of different
types of partners has also failed to determine “under what external and internal environment
conditions those types of partners generate more effective collaborative innovation.” The
literature is mostly based on the evaluation index system and evaluation method of
collaborative innovation investment risk (Shi and Ren, 2000). Much of the remaining
research involves separate studies of the impacts of the dynamic capabilities within an
enterprise (Atuahene-Gima, 2005; Jaworski and Kohli, 1993; Jiao et al., 2016) and the
external environment on collaborative innovation (Parkhe, 1993; Song and Montoya-Weiss,
2001).
This study contributes to the literature in three ways. First, the study is among the first to
focus on analyzing how different intensities of commercial partnerships affect collaborative
innovation. We find that the intensity of commercial relationships appears to drive a positive
effect on collaborative innovation. This finding highlights the differences between business
partners and non-business partners even further. Second, this study deepens the view that
partner heterogeneity promotes firm innovation. What impact will different types of partners
have on the company’s innovation performance? Solving this problem is crucial for
business decision-makers in open innovation. According to differences in environment and
differences in organizational capability, the two relationships have different effects on
innovation performance. Furthermore, different from the previous research, which has
mainly proceeded from the theory of resources and transaction cost theory, this study uses
the basic viewpoints of knowledge-based theory. The study emphasizes the long-term
impact of knowledge mobility between partners on corporate innovation performance, and it
enriches the theoretical perspective of cooperative partners in open innovation. The study
provides an excellent research perspective and research path for effectively responding to
the principle issues of external partners in open innovation.
PAGE 1430 j JOURNAL OF KNOWLEDGE MANAGEMENT j VOL. 23 NO. 7 2019

In addition, this study has important managerial implications. In the process of innovation,
companies must choose different types and quantities of partners and regulate the
partners’ innovative behavior by establishing a corresponding network structure and
relationship rules. Related companies should work harder to strengthen the concept of
cooperative innovation and build and manage a highly efficient innovation network.
Furthermore, the universality of innovation cooperation is accompanied by high failure rates
and instability (Killing, 1982; Nakamura, 2005). Conventional wisdom states that it is
desirable to form cooperative relationships with various partners with a complementary
knowledge set; however, our results suggest that the choice is in fact considerably more
complex. Commercial partnerships are not equally beneficial in collaborative innovation.
Finally, managers can also draw insights from these analyses. Specifically, they should
avoid adopting or eschewing the comprehensive decision-making of collaborative
innovation partners solely on the basis of popular trends or the relative stability of their
environments. Instead, it would be better for them to carefully consider the characteristics of
their organizational information environments internally and externally before making
strategic innovation decisions.
The study is organized as follows. After the literature review, we first examine the relative
effects of the two types of commercial partnerships – business partnership and non-
business partnership – on the collaborative innovation of high-tech firms in emerging
economies. Second, we focus on the moderate effect of internal dynamic capabilities and
external technological uncertainty. Third, we present and discuss the empirical results.
Finally, we discuss the results, draw the major conclusions, present some managerial
implications and provide some directions for future research.
2. Literature review and hypotheses

2.1 Collaborative innovation
Many firms struggle to develop innovations that extend beyond their existing knowledge,
technology and competencies (Stuart and Podolny, 1996), especially for small and
medium-sized enterprises. The lack of innovation resources has become a bottleneck for
firm innovation and development. Consequently, external resources for the promotion of
firm innovation and development have become supplements to firms’ internal knowledge
bases, as well as an important strategic arrangement. It provides firms with an opportunity
to gather information, knowledge and technologies to increase the internal base of key
resources (Santoro et al., 2018). Moreover, external knowledge sourcing enhances the
effects of organizational ambidexterity on firm performance (Vrontis et al., 2017). Therefore,
collaborative innovation has become an important topic in academic and business circles
(Corsaro et al., 2012). Collaborative innovation has also become a heavily researched topic
in the field of innovation management, strategic management and supply-chain
management (Mishra and Shah, 2009).
Collaborative innovation mainly refers to firms in the process of cooperating with other
organizations that have complementary innovative resources and the ability to enhance
innovation performance through the integration of distributed resources and abilities
(Mishra and Shah, 2009; Un et al., 2010). An et al. (2014) found that collaborative innovation
can improve organizational effectiveness, efficiency and competitiveness through trust,
sustainability and extensibility building. Moreover, collaboration can help reduce
uncertainty by making sense of rapid changes and building shared expectations and
approaches to innovation challenges (Dodgson, 2014). Based on the economic theory of
the resource-based view, the purpose of establishing cooperative relationships among
enterprises and organizations is to obtain complementary resources, including financial
capital, technical capacity, management ability and product innovation ability (Osborn and
Hagedoorn, 1997). From the perspective of knowledge management, the process of
collaborative innovation is actually the process of knowledge innovation, which is the
VOL. 23 NO. 7 2019 j JOURNAL OF KNOWLEDGE MANAGEMENT j PAGE 1431

process of knowledge acquisition and knowledge application and, ultimately, the forming of
a knowledge advantage (Yu and Hu, 2015).
With the increasingly dynamic changes in the environment, the connotation of collaborative
innovation has been continuously expanded. Today’s collaborative innovation has
expanded from within a firm’s cross-sectoral cooperation to binary, ternary or even network
innovation and many other types of cooperation. From the point of view of collaborative
characteristics, activities in the collaborative process include multi-faceted activities such
as collaborative R&D, collaborative production and collaborative marketing. Based on the
scope of collaborative activities, the related roles are divided into individuals, groups and
organizations. The acquisition and the application of knowledge among the subjects in
collaborative innovation promote the formation of synergies and achieve a synergy effect
whereby the overall benefit is greater than the sum of individual interests. In this process,
collaborative partner selection is crucial. There are significant differences among different
types of partners that can determine the way in which collaboration is managed and the
type of innovation that can be achieved (Whitley, 2002). Partners’ various tacit and explicit
knowledge is continuous and dynamic. The different modes of knowledge conversion
among different types of partners shapes this tacit/explicit interaction to determine the type
of innovation that can be achieved (Josune and Andrea, 2014).
2.2 Impact of different partnerships on firms’ collaborative innovation

Cooperating with different types of enterprises or organizations can produce inconsistent
effects and impacts. The number of partners and their respective industries have a
significantly different impact on collaborative innovation (Okamuro, 2007). Furthermore, the
specific characteristics and cooperation goals of each collaborative partner are not the
same. Belderbos et al. (2004) also argue that different types of partners have different
breadths and depths of knowledge and degrees of access to knowledge. Firms with
superior knowledge management capabilities are more effective in augmenting the
magnitude of their external sources of knowledge and, therefore, improving their
collaborative innovation (Ferraris et al., 2017). Consequently, cooperating with different
types of enterprises or organizations can produce inconsistent effects and impacts. In this
study, we divide collaborative partners into business partners and non-business partners.
Business partners can be further divided into horizontal competing companies and vertical
companies (suppliers and customers). Modes of cooperation are determined according to
the motivation to cooperate, i.e. supplier-driven cooperation, demand-driven cooperation
and partner-driven cooperation (Brink, 2017). Non-business partners include relationships
among firms and ROs (universities and technological institutions), government, consulting
companies and industry expositions.
The current study uses Alibaba Cloud Computing, a world-famous Chinese high-tech
enterprise, as an example to explain its business and non-business partners in making
decisions about collaborative innovation. As the world’s leading cloud computing and AI
technology company, Alibaba Cloud Computing’s choice of partners has always been
cross-industry and cross-domain. It has cooperated with many well-known universities to
create a “cloud computing technology and application” professional talent training class,
build cloud computing laboratories and jointly develop Alibaba Cloud products. In addition,
it works with industry associations in various fields to acquire actual data and cases and to
establish a big-data experiment library and project training base. By taking advantage of
the reform of China’s government affairs, it has signed strategic cooperation agreements
based on cloud computing and big data with seven provincial governments to vigorously
develop cloud computing innovation. In addition to the above cooperation with non-
business partners, Alibaba Cloud Computing has close business partners. In 2017, more
than 20 companies were authorized in the first batch in the Alibaba Cloud Link City LoT

Platform Cooperation Project, most of which were technology companies and upstream and
downstream companies in the Smart City’s industrial chain.
The transfer of tacit and explicit knowledge among different partners is a continuous and
dynamic process. Through the transmission line from the individual to the inter-organization,
firms can overcome the boundaries of their own information and past learning, thereby
building and acquiring a new context, a new view of the world and new knowledge (Josune
and Andrea, 2014). The following sections take the perspective of business partners and
non-business partners to elaborate on the different impacts of cooperation among firms and
different partners. Next, we explore three commercial partnerships based on three different
motivations: supplier-driven collaboration, demand-driven collaboration and partner-driven
collaboration (Brink, 2017).
First, we examine vertical cooperation between firms and suppliers. The more of this type of
contact there is, the greater the degree of product innovation there is (Meyera and Athaide,
1991). Many manufacturers and suppliers use their own knowledge to conduct
technological innovation and product innovation, which allows them to spend more on
developing, using and maintaining technology (Petersen et al., 2005). Using the information
provided by the supplier can provide innovative results more quickly in the early stages of
product development. In addition, Koufteros et al. (2007) found that suppliers that are only
responsible for providing professional knowledge and are not responsible for specific tasks
or component development will have a positive impact on collaborative innovation.
Second, product innovation often requires cooperation with customers (Fritsch and Lukas,
2001). Firms engage in joint business partnerships with customers because doing so allows
firms to gain considerable knowledge about new technologies, markets and process
improvements (Whitley, 2002) and has a significant impact on both product and process
innovation (Miotti and Sachwald, 2003). Consumers are an important source of information
such as demand preferences and market demand trends, and they can help firms improve
the success rate of product innovation (Gruner and Homburg, 2000; Powell et al., 1996).
Furthermore, lead users create their own processes in the generation of innovations that
satisfy their needs, which can be useful for firms to improve their processes (Harhoff et al.,
2003).
Third, collaborative innovation with competitors’ collaboration is identified as “co-creation of
value” in the literature (Vargo and Lusch, 2008). The purpose of horizontal collaboration with
competitors, in general terms, is to carry out basic research and establish standards
(Tether, 2002). Pre-competitive research projects are also one of the reasons for working
with rivals (Dussauge and Garrette, 1993; Tidd and Trewhella, 1997). Adequate
communication with competitors can help firms understand their own position in the market
and the current level of advanced technology. This is stressed as positive for innovation and
competiveness (Frow et al., 2016). Small and medium-sized enterprises should not only
realize the need for cooperation with competitors but also pay attention to control
information asymmetry and other factors caused by risk, which include role conflicts,
opportunistic behaviors and a lack of clarity of expectations leading to role ambiguity
(Crowdhury et al., 2016; Brink, 2017).
Thus, we posit the following:
H1a. Partnership with business partners is positively associated with firms’ collaborative
innovation.
Non-business partners, including ROs, universities and technological institutions and
industry expositions, have not traditionally focused on advancing firm innovation processes
but rather on providing firms with new scientific and technological knowledge (Lundvall,
1992). In fact, several studies have found collaboration with non-business partners to be the
most effective way to achieve innovations intended to open new markets and segments
(Belderbos et al., 2004).

Such non-business partners face considerable pressure with firms. On the one hand, the
government encourages universities and research institutions to conduct more research to
improve industries’ competitiveness (Tether, 2002). On the other hand, the pressure on
capital has led to more cooperation between non-business partners and industry. These
external pressures lead to the following characteristics of non-business partners: first, they
have professional advantages and independent technical expertise, which can create
considerable knowledge for an industry; second, they usually cooperate with different
enterprises to obtain a wide range of diversified knowledge. As a result, these non-business
partners as an important basis for knowledge innovation and technological innovation can
help firms obtain basic scientific knowledge, senior personnel and other important
resources to join a specific technological or scientific field and then become a firm’s main
partners in technological innovation. Especially for some knowledge-intensive high-tech
technology industries, forming an innovative network can reduce transaction costs and
network cooperation risk (Belderbos et al., 2004).
However, partnerships with non-business partners also have the potential risk of knowledge
spillovers. The consulting organization acts as a service company for innovation and is in
the position of an agent in the regional innovation network. Moreover, by integrating the
information and knowledge of different companies to serve other companies, the consulting
organization can easily disclose the key information and knowledge of the enterprise to the
competitors (Hoecht and Trott, 2006). Similarly, experts who are technical consultants for a
number of companies may also pass key information and knowledge from the company to
competitors.
In addition, absorbing this type of knowledge is challenging for firms, although non-
business partners, such as universities and research institutions, have advantages in basic
research and are potentially valuable sources of new knowledge (Cohen et al., 2002). The
challenge of such knowledge transfer often relates to the development of trust and the
establishment of a common understanding in communications and interactions between
firms and academics. However, the information they share with each other is mostly invisible
knowledge that is not the described knowledge contained in the action (Wei and Fei, 2014).
The scientific knowledge of universities and research institutions is theoretical research,
which is mostly remote from the market. Thus, invisible knowledge is not easy for firms to
digest and absorb. As a result, the cooperation of universities and research institutions
cannot directly promote firms’ collaborative innovation. Such cooperation must be turned
into explicit knowledge in a certain way, and then it can be grasped by and bring profits for
firms. In contrast, business partners hold more market information, which can be
transformed into results much sooner than for non-business partners.
All these factors encourage us to hypothesize that these different types of collaborative
partners will have different impacts on firms’ degree of collaborative innovation. However, it
seems probable that partnerships with business partners will be more relevant to achieving
firms’ collaborative innovation with a higher degree of novelty, whereas collaboration with
competitors will have weaker effects on product development and innovation.
Thus, we posit the following:
H1b. Partnership with non-business partners is positively associated with firms’
collaborative innovation but more weakly than relationships with business
partners.
2.3 Moderating effect of technological uncertainty

Environmental uncertainty has been identified as a critical variable affecting organizational
behavior (Koberg, 1987) and a key dimension deciding the costs of transactions
(Williamson, 1981). Therefore, coping with this uncertainty becomes a primary task for firms.
Among these external environment uncertainties (e.g. market uncertainty, technological

uncertainty and competitive uncertainty and other subsystems to measure), we focus on
technological uncertainty (Desarbo et al., 2005). Technological uncertainty is the perceived
instability and complexity of technology, as well as the unpredictability of rapid and
significant change – such as the sudden emergence of new and breakthrough components
or software (Bstieler, 2005) – which is expressed as a shorter product development cycle
and faster technology obsolescence. Specifically, the greater the technological uncertainty,
the faster the application of new knowledge, the updating of technology and the innovations
among different industries will converge (Song and Montoya-Weiss, 2001). We focus on
technological uncertainty as it is particularly relevant in technology-intensive industries.
From an industry perspective, the environment of high-tech enterprises is more turbulent,
and the change in the technology paradigm is more frequent than that of traditional industry
(Dai and Ma, 2007).
In a technological uncertainty situation, integration of existing knowledge for a firm’s
innovative activities may not be effective because the firm’s existing technology, market
knowledge and resources may not be suitable for the current innovation (Song and
Montoya-Weiss, 2001). The innovation team must reconstruct and expand the existing
knowledge base and then carry out the necessary innovation activities on this basis.
Furthermore, cooperation between firms can produce economies of scale and scope and
further lead to increased total investment in research and development, thereby reducing
the development process of technological uncertainty (Hagedoorn, 1990). Although a high
level of perceived technological uncertainty might mean that enterprises will produce
stronger motivation to develop collaborative innovation and expand the range of partners’
choices, perceived uncertainty can give rise to sociopolitical turbulence, particularly in
alliances where the latent forces of political behavior and conflict might exist (Tushman and
Anderson, 1986).
First, when the pace of technological change is perceived as steady, company managers
feel that they have the time to explore, leverage and resolve differing perspectives from
collaborators. However, the urgency and time pressures surrounding high perceived
uncertainty may prevent a suitable resolution of different perspectives on affective conflicts
(Amason and Sapienza, 1997), political behavior (Eisenhardt, 1989), social disintegration
(Milliken and Martins, 1996) and consensus-creation challenges (Knight et al., 1999;
Carpenter and Fredrickson, 2001). Managers do not want to bear too much pressure and
thus form a negative influence on collaborative innovation excitation.
Second, by entering a cooperative relationship, a firm opens itself to opportunistic
behaviors by partners (Parkhe, 1993). This concern is especially salient for small-to-
medium-sized enterprises with knowledge-based products and technologies that have
relatively less bargaining power than large firms (Lavie, 2007). Collaborative innovation may
be hampered by a lack of incentive for partners to share complex production knowledge
that may be their source of advantage (Arundel and Kabla, 1998). Furthermore, although
Kale and Singh (2009) believe that collaboration can create new market opportunities by
sharing risks and resources, strategic asset encroachment is the central problem of
enterprise cooperation. Furthermore, the greater the uncertainty associated with
unpredictable technological change, the more serious the encroachment of strategic assets
will be.
Third, technology changes fast and does not have continuity in technological uncertainty.
Information is often not accurate and difficult to obtain so that managers face great
decision-making ambiguity. Unpredictable, sudden changes in the external environment
increase the demand for information processing and even force companies to change their
strategic positioning. When technology uncertainty increases, managers struggle to assess
future co-performance, which not only increases pre-transaction costs but also leads to
more uncertainty.

Thus, we hypothesize the following:
H2a. Technological uncertainty weakens the positive relationship between partnership
with business partners and firms’ collaborative innovation.
H2b. Technological uncertainty weakens the positive relationship between partnership
with non-business partners and firms’ collaborative innovation (Figure 1).
2.4 Moderating effect of firms’ dynamic capabilities

Technological uncertainty is based on the urgent external environment faced by high-tech
enterprises. At the same time, dynamic capabilities to address uncertainties within
enterprises also play an important role in firm innovation. Dynamic capabilities are the ability
to integrate, build and reconfigure internal and external resources and capabilities (Teece
et al., 1997), which yield firm competitiveness (Umesh and Nisha, 2018). They are
recognizable routines and processes (Eisenhardt and Martin, 2000). Zott (2003) follows the
definition of dynamic capabilities by Teece et al. (1997) and argues that dynamic
capabilities are the routines or processes that guide resource allocation. More importantly,
firms can use unique resources to upgrade and refactor their core competencies in
response to increasing changes in the market to obtain and maintain a sustainable
competitive advantage (Wang and Ahmed, 2007). Based on the above analysis, the current
study argues that dynamic capabilities are firms’ abilities to continuously integrate,
configure and reorganize their internal and external resources to meet the needs of the
market and develop quality products and services to enable the participating firms to obtain
a sustained competitive advantage, facing changes in the external environment.
Dynamic capabilities have a significant role in promoting sustainable innovation (Verona
and Ravasi, 2003). Dynamic capabilities help firms, inter alia, discover new opportunities
and strategies (Griffith and Harvey, 2001), enter new markets (King and Tucci, 2002), learn
new skills (Bowman and Ambrosini, 2003; Zollo and Winter, 2002), use new resources for
strategic change, develop new business (Bowman and Ambrosini, 2003), develop new
products (Sapienza et al., 2006) and promote the commercialization of new technology in
the R&D sector (Marsh and Stock, 2003).
Figure 1 Research model

Perceptive firms can better target market segmentation and position themselves to win
more cooperation to develop opportunities and tendencies and to foresee future technology
(Volberda, 1998). Strategic advantages increasingly come from the effective integration of
enterprises and external activities, including strategic alliances, knowledge networks,
upstream and downstream supply chain integration and technology transfer, effective
technology integration and customer integration (Hamel, 1991). For China’s high-tech
companies, the ability to integrate external resources is particularly important. This is
because in the production of some key components, Chinese companies lack the relevant
core technologies, and advances can only be achieved through in-depth cooperation with
other external companies, strategic alliances and technology transfer.
Firms with strong dynamic capabilities will be able to apply knowledge more thoroughly and
comprehensively (Popper and Lipshitz, 1998). This will organize the firm and the partners
into an organic whole so that the enterprise and its partners can maintain synchronization to
promote the evolution of organizational practices and adapt to environmental changes.
Learning and absorptive capacity are the essence of dynamic capabilities and the basis for
capability updating. The research of Liu and Xie (2003) shows that the absorptive capacity
of an enterprise will be influenced by four factors – the stock and connotation of knowledge,
the level of R&D investment, the learning intensity and method and the mechanism of
organizational learning. A major reason for the rapid growth of industrial technology in
Japan and Korea is that their companies have a strong ability to absorb new knowledge
and new technologies, so they can create competition through imitation, improvement, and
innovation. Firms with better absorptive capabilities can better learn from different partners
and combine their own research experience to develop first-hand knowledge of new
technologies and increase the breadth and depth of available knowledge, which constantly
promotes firm innovation (Daghfous, 2004).
Thus, we hypothesize the following:
H3a. Dynamic capabilities strengthen the positive relationship between partnership with
business partners and firms’ collaborative innovation.
H3b. Dynamic capabilities strengthen the positive relationship between partnership with
non-business partners and firms’ collaborative innovation.
3 Research method
3.1 Sample and data
The domestic research on collaborative innovation is mostly about large companies,
especially listed companies. However, this does not mean that the results of large
companies based on the empirical research have the same degree of explanatory power
for small and medium-sized enterprises. Small and medium-sized firms not only occupy the
absolute advantage in quantity in China but also have different attributes and
characteristics in the process of their own growth and development. Therefore,
comprehensive research of small and medium-sized Chinese firms is important.
The source for our empirical analysis was a sample of high-tech firms in Jiangxi province,
China. We followed the key informant approach to collect data from one R&D manager at
each firm. R&D managers were asked to answer a questionnaire based on their
organizational conditions in the year 2012 (the data collection was conducted in January
2013). To ensure the quality of the data, we collaborated with a Chinese Government
agency (Municipal Science and Technology Commission) to send out survey invitations.
Firms in Jiangxi province could download the electronic questionnaire from the website and
return it to an office established by the local government. A total of 733 firms participated in
this project, while only 403 returned the electronic survey by the return date (rate of return =
54.9 per cent). We only selected the firms that answered all the questions. Consequently,

our sample comprised 370 firms. On average, the R&D managers had been in their
positions for 8.1 years (standard deviation [SD] = 5.7). We measured all the variables in this
study by questionnaires completed by R&D managers in these firms, also using archival
data provided by the firms’ finance departments or databases. Table I presents the profiles
of the responding companies, including the firms’ industries, ownership and sizes (numbers
of employees).
In addition, to check the non-response bias that may exist in this study, SPSS 20.0 was
used to compare the early respondents (the first 25 per cent of the recycled questionnaires)
and late respondents (the last 25 per cent of the recycled questionnaires) (Armstrong and
Overton, 1977). The method assumes that the late respondents are similar to those of the
respondents who did not answer the questionnaires. Comparing the two groups, we found
that there were no significant differences in the control variables (industry, ownership, firm
size, subsidiary) between the two groups at a 5 per cent confidence interval. This is a
preliminary indication that the sample does not have a significant nonresponse bias.
Therefore, there is no problem of response bias in this study.
Finally, because all the questions in the questionnaire are completed by the same
respondent, common method bias is likely to occur. In this study, Podsakoff and Organ’s
(1986) statistical methods are used to test the sample data. Harman’s single-factor test was
used to perform the factor analysis of all the items in the questionnaire. The first principal
component obtained when not rotated reflects the amount of homologous data deviations.
In this study, all the items in the questionnaire were used together to perform the factor
analysis. The first principal component obtained in the non-rotation does not account for the
majority of the load. This ensures the existence of homologous bias and will not affect the
conclusions of the study.
3.2 Measures
At the beginning of each questionnaire, we asked the R&D managers of the focal firms to
recall one firm with which their firm had collaborated in at least one project and to answer
the questions that followed. All the questionnaire items used a seven-point Likert scale
where 1 = “completely disagree” and 7 = “completely agree.”
Table I Demographic proﬁle of the sample (N = 370)

N (%)
Industry
High-tech manufacturing 282 76.22
Non-high-tech manufacturing 41 11.08
Non-manufacturing 47 12.70
Ownership
State-owned 34 9.19
Non-state-owned 336 90.81
Firm size (number of employees)
<50 31 8.38
50-100 70 18.92
100-300 145 39.19
300-500 58 15.67
>500 66 17.84
Subsidiary
Subsidiary 115 31.08
Non-subsidiary 255 68.92

3.2.1 Dependent variables. Collaborative innovation: The previous studies have used
several intermediate research outputs or performance indicators such as patenting
tendency, the level of product innovativeness (Kotabe and Swan, 1995) or products under
development (Deeds and Hill, 1996) to measure a firm’s collaborative innovation. In our
study, incremental innovation and radical innovation were both included. To elaborate,
radical innovations are highly revolutionary in nature and competence-destroying, and they
induce major transformations of existing products, technologies or services (Eisenhardt and
Tabrizi, 1995; Tatikonda and Montoya-Weiss, 2001), whereas incremental innovations focus
on refining existing firm offerings by reinforcing prevailing firm capabilities (Kline and
Rosenberg, 1986; Subramaniam and Youndt, 2005). In this study, new production
techniques and capabilities that the firms had acquired or studied were used to measure
radical innovations, while improved or upgraded techniques and capabilities regarding
existing products and services were used to measure incremental innovation.
3.2.2 Independent variables. Two types of commercial partnership – business partners and
non-business partners – were our independent variables because this study attempted to
investigate the influences of multiple collaborative partnerships on firms’ collaborative
innovation. We divided the collaborative partners into business partners and non-business
partners according to the different commercial partnerships in this study. Business partners
could be further divided into horizontal enterprises (competitors) and upstream and
downstream companies (suppliers and customers). Non-business partners included
relationships between firms and ROs, government, consulting companies and industry
expositions and technological institutions. In this study, to measure the degree of different
collaborative partners, the questionnaire listed the ways in which the respondents’ firms had
formed partnerships. We used the item “The degree to which your firm has obtained the
assessment of the extent of innovative ideas from the following sources (supplier, customer,
competitor, consulting company and research organizations, public sector, industry
meeting, industry association, exposition) in the past three years” (1 = “strongly disagree,”
5 = “strongly agree”) to measure the degrees of different collaborative partners.
3.2.3 Moderating variables. Technological uncertainty: We relied on the measure of
technological uncertainty developed and validated by Atuahene-Gima and Li (2004). The
measurement of technological uncertainty relied on managerial assessment on a two-item
scale including “The core technology of the industry has developed rapidly” and “The
industry has introduced many new products.” Together, these items capture the essence of
technological uncertainty because they reflect “the perceived speed of change and
unpredictability of technology in the firm’s principal industry” (Atuahene-Gima and Li, 2004).
Additionally, they are often more consequential in the context of exploratory firm behaviors
than “objective” uncertainty (Heavy and Simsek, 2013).
Dynamic capabilities: We relied on the measure of dynamic capabilities developed by
Teece (2007) and Jiao et al. (2013). We used the item “Our firm is actively seeking and
investigating technological developments that may help our business in the external
environment” to measure firms’ opportunity perception; the item “For the development of
technology in the external environment, our company usually can respond quickly”; and the
item “Our firm can timely perceive technical developments and respond appropriately” to
measure firms’ ability to grasp opportunities and integrate. Additionally, the item to measure
absorption capacity was “For the discovery of new technology and technology
development that is helpful to our business, our company is usually in the leading industry
position.”
3.2.4 Control variables. There were firm-specific and external factors that may have affected
the conceptual model. Therefore, we controlled for firm size, industry, ownership
(specifically, whether it was a state-owned firm) and nature (specifically, whether it was a
subsidiary firm).

Firm size: Firm size is a commonly used control variable in innovation-related studies
(Becker and Dietz, 2004; Tsai, 2009; Veugelers and Cassiman, 1999). Empirically, firm size
is observed as having an impact on a firm’s collaborative innovation (Freeman, 1985;
Scherer, 1965). The famous “Schumpeter hypothesis” posits that large enterprises have a
comparative advantage of greater innovation over small firms because of economies of
scale, risk sharing and financing channels (Schumpeter, 1942). Thus, the current research
needed to control for firm size. The measure of firm size was the number of employees.
Industry: Different industries may display distinct needs and outcomes of innovation (Ahuja
and Katila, 2001; Jones et al., 2001; Veugelers and Cassiman, 1999). In this study,
industries were divided into three categories: high-tech manufacturing, non-high-tech
manufacturing and non-manufacturing. We developed a set of two dummy variables to
indicate in which industry the respondents operated (IndustryA = 1, IndustryB = 0 if the
focal firm was high-tech manufacturing; IndustryA = 0, IndustryB = 1 if it was non-high-tech
manufacturing; and IndustryA = 0, IndustryB = 0 if it was non-manufacturing).
Ownership: Particularly for firms in emerging economies, owing to differences in
infrastructure, policy and managerial style (Rothaermel et al., 2006; Tsai, 2009), the nature
of firm ownership is an important explanatory factor in firms’ collaborative innovation. We
measured firm ownership as a dummy variable (1 if the focal firm was a state-owned
enterprise, 0 if not).
Subsidiary: Subsidiaries provide a particularly interesting context for studying collaborative
innovation as many firms are currently undergoing a dramatic shift from traditional,
horizontally integrated “federal” structures characterized by collaboration, embeddedness
and knowledge sharing (Andersson et al., 2002) toward being more vertically controlled.
We measured a firm’s nature by judging whether it was a subsidiary firm. A dummy variable
was implied (1 if the focal firm was a subsidiary, 0 if not).
4. Results
The hypotheses were tested using partial least squares (PLS), a structural equation
modeling technique adopting a principal component-based estimation approach (Chin
et al., 2003). PLS explicitly estimates latent variables and their relationships, does not
require any assumptions about data distributions, overcomes identification problems in
formative relationships and is more suitable for modeling complex relationships (Henseler et
al., 2009). Hence, PLS was appropriate for this study.
As the operationalization of internal and external environments included a substantial
number of new scales, we first conducted exploratory factor analysis. Two factors were
extracted with all the items loading on their respective constructs, and there were no
substantial cross-loadings (Table II). In a second step, we conducted confirmatory factor
analysis using PLS. As shown in Table III, the composite reliabilities and Cronbach’s alphas
for all the reflective constructs were above 0.7, which exceeded the suggested benchmark
of 0.7 (Nunally, 1978). All the loadings were above 0.7, supporting the reliability of the
indicators. Additionally, all the items loaded more highly on their own constructs than on
others, and none of the cross-loadings exceeded 0.7, thereby demonstrating discriminant
validity at the item level. Discriminant validity at the construct level could be confirmed as
the square roots of the average variances extracted (AVEs) were greater than the
correlations between constructs, meaning that all the constructs shared more variance with
their own measures than with others (Fornell and Larcker, 1981). Moreover, the AVEs
exceeded the cut-off value of 0.5 (Fornell and Larcker, 1981), demonstrating convergent
validity.
In addition, the R2 in the model is 0.462, which shows that the measurement model has
strong predictive ability. By using the Geisser (1975) and Stone (1974) approach, we have
investigated the cross-validated redundancy Q2 and the cross-validated communality Q2

Table II Individual item reliability and composite reliability
Concept (latent variance) and measurement items Factor loading t-value Composite reliability
Business partners
Equipment, materials, accessories and software and other suppliers 0.769 25.726 0.858
Customers 0.864 62.530
Competitors 0.817 31.944
Non-business partners
Consulting firms and research institutes 0.735 25.180 0.912
Other public departments, if there are, for instance, business departments and 0.788 29.030
government offices.
Professional industry conferences 0.866 54.458
Industry associations, trade associations 0.901 81.341
Exhibitions and expositions 0.811 36.274
Collaborative innovation
Our firm has acquired new production technology and ability 0.870 47.658 0.919
Our firm has acquired a variety of new capabilities (such as investment in new 0.868 53.271
technologies, research and development personnel to learn new technologies)
Our firm has acquired upgraded knowledge of existing products and 0.853 50.911
technologies
Our firm has acquired improved existing product development process 0.852 49.519
Dynamic capabilities
For the discovery of new technology and technology development that is helpful 0.797 35.493 0.928
to our business, our company is usually in the industry leading position
Our firm is actively searching and investigating the technological developments 0.861 51.352
that may help our business in the external environment
For the development of technology in the external environment, our company 0.924 80.243
usually can make a quick response
Our firms can timely recognize the technical development, employ the 0.910 90.538
appropriate response
Technological uncertainty
The core technology of the industry has developed rapidly 0.935 37.180 0.886
The industry introduced many new products 0.848 18.152
(Fornell et al., 1996). CV Red Q2 = 0.333 and CV Com Q2 = 0.755. These results proved that
the coefficient estimates cannot be inflated and/or over-powered.
In a first step, we tested the baseline hypothesis. First, “business partner” had a significant
positive association with “firms’ collaborative innovation” ( b = 0.449, p-value < 0.01),
thereby supporting H1a. Second, “non-business partner” had a significant positive
association with “firms’ collaborative innovation” ( b = 0.182, p-value < 0.01). Additionally,
the association between business partner and collaborative innovation was stronger than
the association with a non-business partner and collaborative innovation ( b = 0.449> b =
0.182). Hence, the relationship with a non-business partner was positively associated with
firms’ collaborative innovation but more weakly than a relationship with a business partner,
thereby supporting H1b.
To test H2a and H2b, we included “technological uncertainty” in the structural model. The
relationship between “business partner” and “firms’ collaborative innovation” became
insignificant ( b = 0.003). Therefore, H2a was rejected. Furthermore, the included
“technological uncertainty” in the structural model resulted in a significantly negative
association with “non-business partner” ( b = 0.117, p-value < 0.05). Therefore, H2b was
supported, suggesting that technological uncertainty weakens the positive relationship
between a non-business partner and firms’ collaborative innovation.
To test the conditional effects stipulated in H3a and H3b, we followed the guidelines
suggested by Preacher et al. (2007). First, we included the interaction terms in the structural

PAGE 1442
j JOURNAL OF KNOWLEDGE MANAGEMENT j VOL. 23 NO. 7 2019
Table III Correlations matrix and reliability
Mean SD Comp Rel Cronbach’s alpha AVE 1 2 3 4 5 6 7 8 9 10
1. Technology uncertainty 4.68 2.24 0.89 0.75 0.80 1.00

2. Dynamic capabilities 5.68 3.25 0.93 0.90 0.76 0.23 1.00
3. Business partner 6.55 3.58 0.86 0.75 0.67 0.25 0.43 1.00
4. Non-business partner 3.56 6.58 0.92 0.88 0.68 0.24 0.31 0.61 1.00
5. Collaborative innovation 5.09 4.02 0.92 0.88 0.74 0.22 0.50 0.57 0.46 1.00
6. Firm size 578.56 2037.82 n/a n/a n/a 0.01 0.07 0.01 0.03 0.03 1.00
7. IndustryA n/a n/a n/a n/a n/a 0.04 0.16 0.55 0.08 0.04 0.15 n/a
8. IndustryB n/a n/a n/a n/a n/a 0.06 0.15 0.06 0.15 0.07 0.08 0.63 n/a
9. Ownership n/a n/a n/a n/a n/a 0.07 0.08 0.03 0.03 0.04 0.06 0.02 0.02 n/a
10. Subsidiary n/a n/a n/a n/a n/a 0.01 0.08 0.03 0.02 0.07 0.16 0.02 0.02 0.21 n/a

Notes: N = 370; significant at 10% level; significant at 5% level; significant at 1% level
model. We ran the main effects model to obtain estimates for the latent variables scores.
The interaction terms were then built up as the element-wise product of the standardized
latent variables scores of the independent and moderating variables. The results showed
that the association between “business partner” and “firms’ collaborative innovation” was
significantly moderated by “dynamic capabilities” ( b = 0.101, p-value < 0.05), thereby
failing to support H3a. To evaluate H3b, we again first tested the interaction effect of “non-
business partner” and “dynamic capabilities” on “firms’ collaborative innovation.” The
results showed that the association between “non-business partner” and “firms’
collaborative innovation” was significantly moderated by “dynamic capabilities” ( b = 0.120,
p-value < 0.05). Together, this supported H3b. In conclusion, H1a, H1b, H2b and H3b are
supported, while H2a and H3a are rejected (Figure 2).
To characterize the interaction effects of H2 and H3, we followed Aiken and West’s (1991)
procedure to decompose the interaction terms. Specifically, we conducted simple slope
tests and plotted the relationships in Figures 3, 4, and 5. In the tests, we split the
technological uncertainty variable and dynamic capabilities into two groups – low (one
standard deviation below the mean) and high (one standard deviation above the mean) –
and estimated the effects of business partner/non-business partner on collaborative
innovation for both levels. As illustrated in Figure 3, the relationship between the business
partner and collaborative innovation was weaker (had a steeper negative slope) at higher
levels of dynamic capabilities. This supported our assertion that at higher levels of dynamic
capabilities, a business partner has a weaker impact on collaborative innovation. Figure 4
illustrates that the relationship between a non-business partner and collaborative innovation
was weaker (had a steeper negative slope) at higher levels of technological uncertainty.
This supported our assertion that at higher levels of technological uncertainty, a non-
business partner has a weaker impact on collaborative innovation. Similarly, Figure 5
illustrates that the relationship between a non-business partner and collaborative innovation
was stronger (had a steeper positive slope) at higher levels of technological uncertainty.
This supported our assertion that at higher levels of technological uncertainty, a non-
business partner has a stronger impact on collaborative innovation.
Figure 2 Structural model of two types of commercial partners on collaborative innovation:

technological uncertainty and dynamic capabilities

Figure 3 Moderating effect of dynamic capabilities on business partner to collaborative
innovation
Collaborave innovaon
1
0
1 2 3 4 5 6 7
–1
–2
–3
–4
–5
collaborave innovaon with low-dynamic capabilies

collaborave innovaon with high-dynamic capabilies
Figure 4 Moderating effect of technological uncertainty on non-business partner to

collaborative innovation
0
1 2 3 4 5 6 7
–1
–2
–3
–4
–5
collaborave innovaon with low-technological uncertainty

collaborave innovaon with high-technological uncertainty
Figure 5 Moderating effect of dynamic capabilities on non-business partner to

collaborative innovation
9
8
7
6
5
4
3
2
1
0
1 2 3 4 5 6 7
collaborave innovaon with low-dynamic capabilies

collaborave innovaon with high-dynamic capabilies

5. Discussion
5.1 Theoretical contributions
Our findings provide a theoretical framework that creates a new classification of commercial
relationships in collaborative innovation and highlights the difference between the two types
of partnership for collaborative innovation. We find that the intensity of commercial
relationships appears to drive the positive effect on collaborative innovation. Collaborating
with business partners that have more intense commercial relationships with the focal firm
helps the firm achieve innovation more efficiently because the focus of collaborative
innovation is primarily on efficiently improving technology, capabilities and product quality
based on the knowledge provided by the collaborative partners. Because of the silence of
knowledge (Polanyi, 1962), the proliferation (transactions) of many types of knowledge is
costly, difficult and slow, which leads to an increase in transaction costs between firms and
non-business partners. Additionally, individuals’ bounded rationality, cognition
and language limit their ability to accurately and comprehensively describe the knowledge
and skills. Even if an individual can clearly portray his or her knowledge and skills,
limitations of cognition hinder the absorption of others (Allan, 2001). However, business
partners have largely alleviated these problems by sharing a similar business environment
with the focal company. This finding even further highlights the differences between
business partners and non-business partners.
In addition, this study deepens the view that partner heterogeneity promotes firm
innovation. What type of impact will different types of partners have on the company’s
innovation performance? Solving this problem is crucial for business decision-makers in
open innovation. The existing literature has not yet fully studied the commercial intensity of
partners. At present, the impact of inter-organizational cooperation on collaborative
innovation performance is generally divided into three parts. Some researchers pay
attention to partners of different types of organizations (Cui and Conner, 2012; Lin, 2012;
Terjesen et al., 2011), some have studied the relationship between technological
diversification and innovation performance among partners (Cui and Conner, 2012;
Goerzen, and Beamish, 2005; Jiang et al., 1999) and more have explored different national
backgrounds and enterprises through the perspectives of international research and
development cooperation innovation (Duysters and Lokshin, 2011; Zhang and Li, 2010).
Business partners and non-business partners are heterogeneous in terms of business
intensity. According to the difference of environment and the difference of organizational
capability, the two relationships have different effects on innovation performance.
Moreover, it is important to realize that not only does perceived uncertainty have both
positive and negative effects, but the relative magnitude of its advantages and
disadvantages is likely to display variability in terms of both strength and ultimate direction.
These results are important because they indicate that collaborative innovation with non-
business partners, rather than with business partners, appears to be negatively influenced
under the moderator of technological uncertainty. When environmental uncertainty arises,
firms do not find the unforeseen contingencies associated with collaborations sufficiently
attractive to establish long-term partnerships, and managers choose not to overburden
themselves with more information-processing demands. Because of the large differences in
the environments and cognitive capabilities between non-business partners and the focal
firm, the uncertainty of the technology makes it impossible for companies to quickly and
commercially use new knowledge, new technologies or new products learned about from
non-commercial partners and to obtain the market recognition. Furthermore, the difference
between firms and non-business partners is so great that companies must spend more time
and energy evaluating and choosing the right collaborative partners, which will seriously
affect the efficiency of collaborative innovation. Moreover, diverse alliances will increase the
conflict between partners, leading to communication and learning disabilities, which are not
conducive to improving the performance of alliance members (Goerzen and

Beamish, 2005; Niederkofler, 1991). Technology is rapidly updated in an uncertain
technology environment, and firms can easily lose the original leading edge in innovation.
As a result, cooperation with non-commercial partners will be weakened, whereas relations
with business partners seem not to be influenced.
Third, our results also contribute to the emerging literature on the impact of internal dynamic
capabilities of enterprises on the choice of collaborative innovation. Although customers
use the products provided by the firm with little regard for how such products have been
created, lead users can create their own processes in the generation of innovations that
satisfy their own needs (Harhoff et al., 2003). As a result, business partners can participate
in the competition of the target company through forward and backward integration.
Moreover, competitors sharing similar contextual knowledge belong to the same industry as
the firm (Tsai, 2009). Additionally, firms tend to limit how closely they can observe the
operational processes of the firm. Instead, competitors tend to rely on knowledge of the
firm’s output, analyzing competing products that led to the creation of the product or
service. Lhuillery and Pfister (2009), for example, find that R&D collaboration with
competitors tends to result in innovation project failures because each partner tries to
extract knowledge from the other while taking actions to protect its own knowledge from
spillover to the other.
Therefore, once a firm has strong dynamic capabilities, it will be able to sense and seize
environmental information to take appropriate action to adapt to changes. A firm need not
rely on the knowledge obtained from business partners to innovate. In contrast, companies
will reduce threats to themselves by reducing their cooperation with business partners.
However, non-business partners typically provide a firm with a wide array of knowledge to
innovate. Non-business partners have significant tacit knowledge that companies cannot
access and that is remote from their daily working processes. When a firm has strong
dynamic capabilities, it has a greater desire to control the environment and a greater hope
to obtain the tacit knowledge provided by non-business partners. Thus, firms will strengthen
cooperation with non-business partners to acquire more knowledge that is beneficial for
their own innovation.
Finally, different from the previous research, which mainly proceeds from the theory of
resources and transaction cost theory, this study uses the basic viewpoints of knowledge-
based theory. The study emphasizes the long-term impact of knowledge mobility between
partners on corporate innovation performance, and it enriches the theoretical perspective of
cooperative partners in open innovation. It provides an excellent research perspective and
research path for effectively responding to the principle issues of external partners in open
innovation.
5.2 Managerial implications

The results of our study carry significant managerial implications for managing collaborative
innovation in emerging economies, such as China.
First, in the process of innovation, companies must choose different types and quantities of
partners, and they must regulate the partners’ innovative behavior by establishing a
corresponding network structure and relationship rules. Enterprises require a transition from
single organizational analysis and knowledge management to multi-organizational
collaboration and management. Choosing the right partner is a key factor in the success of
the alliance (David, 2009). A key question in strategy is whether comprehensiveness
enables firms to make better strategic decisions in various environments. This paper begins
with an analysis of the problems and risks of the two innovative partners (business partner
and non-business partner). It finds that there are many problems in the selection of
innovative partners in China’s high-tech companies and that it is difficult to meet the
requirements for improving a company’s innovation performance. Therefore, related

companies should work harder to strengthen the concept of cooperative innovation and
build and manage a highly efficient innovation network. In this way, companies can innovate
continuously and quickly and obtain high innovation performance in an effective
cooperation network.
Second, collaborating with other firms and organizations indeed helps firms achieve
collaborative innovation because these various collaborations provide access to different
knowledge bases. However, Killing (1982) and Nakamura (2005) find that the universality of
innovation cooperation is accompanied by high failure rates and instability. Conventional
wisdom states that it is desirable to form cooperative relationships with various partners with
a complementary knowledge set; however, our results suggest that the choice is in fact
much more complex. Commercial partnerships are not equally beneficial for collaborative
innovation. Under normal circumstances, for small and medium-sized companies,
cooperative communication is best carried out in companies or organizations with similar
industrial environmental conditions to reduce transaction costs and resolve conflicts.
Business partners generally share similar industry environments with focal firms, while a
non-business partner operates in industry contexts that are relatively different or distant
from that of the focal firm. They are exposed to different regulations and have different
needs and interests from the company. However, when external technology is highly
uncertain or the company has strong dynamic capabilities, the company must choose
partners according to its own resources, capabilities and strategic development goals.
Third, managers can also draw insight from these analyses. Specifically, they should avoid
adopting or eschewing the comprehensive decision-making of collaborative innovation
partners solely on the basis of popular trends or the relative stability of their environments.
Instead, it would be better for them to carefully consider the characteristics of their
organizational information environments before making strategic innovation decisions. With
the increase in corporate partner diversity, the differences between firms and partners will
become greater such that companies must spend more time and energy assessing the
appropriate alliance partners, which will seriously affect the cooperation and innovation
achieved. Thus, it is crucial for managers to pay attention to internal and external
environmental characteristics when selecting their collaborative innovation partners.
5.3 Limitations and further research

We can extend the study in many directions for further research. For example, the context of
this research is collaborative innovation in small and medium-sized enterprises in China.
Although China represents an important research context, it may not be representative of all
collaborative innovation activities. Moreover, the environmental factor (technological
uncertainty) is rather context-specific and may have different meanings and implications in
different countries’ markets. Different levels of economic development, varying regulatory
and legal systems, and distinct cultural and value systems likely produce different relevant
environmental factors, and their effects on the innovative relationship probably also differ in
different countries. In other words, to confirm the external validity of the effect of
technological uncertainty on collaborative innovation, additional studies must extend
beyond the context of China. Specifically, the USA and most European Union countries
have more comprehensive regulations and stronger law enforcement than China in
intellectual property protection and contract enforcement. Given these differences, the
relationship between business partners and collaborative innovation may be better because
contract breakage and intellectual property infringement are unlikely to be serious
concerns. Therefore, it would be a fruitful research direction to examine the differences in
the effects that business partners and non-business partners may have on collaborative
innovation.

6. Conclusions
Drawing broadly on the commercial partnership perspective, the influence of dynamic
capabilities and technological uncertainty and the extant literature on collaborative
innovation, we developed an operating mechanism model for the influence of different
commercial partnerships on collaborative innovation. This study represents a first step in
developing and testing the commercial partnership perspective for collaborative innovation
in China. In this regard, we developed and tested a conceptual framework of two types of
commercial partnership (business partner and non-business partner) and their associations
with collaborative innovation. We also modeled and tested the role of external technological
uncertainty and the moderating effect of internal dynamic capabilities on the process.
The empirical results reveal that collaborative innovation with business partners and non-
business partners is positive and that the former is generally more effective. Moreover, non-
business partners are significantly positive with collaborative innovation if firms have strong
dynamic capabilities, whereas business partners are negative. That is, non-business
partners in collaborations are more likely to lead to better performance under greater
dynamic capabilities, thus verifying our hypothesis that dynamic capabilities moderate the
relationship between commercial partnership and collaborative innovation. However, there
is a negative relationship between collaborative innovation with non-business partners in a
turbulent technological uncertainty environment. In other words, the process is unstable
under turbulent technological uncertainty. Our research has implications for innovative
companies in terms of finding the right way to enhance performance by adjusting different
commercial partnership dynamics in hyper-competitive business environments.
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About the authors

Dr Hao Jiao is Professor in Business School, Beijing Normal University, China. He is Director
in the Center for Innovation, Entrepreneurship and Sustainable Competitiveness, Beijing
Normal University, Beijing, China. He received a PhD in Management from Fudan

University, China. He also serves as Regional Editor – Asia, Journal of Knowledge
Management, and Associate Editor, Technological Forecasting and Social Change. His
research interests include entrepreneurship management, innovation management and
dynamic capabilities theory within the context of emerging markets. He has published well
over 30 articles in major refereed journals in entrepreneurship and innovation management
such as Technological Forecasting and Social Change, Academy of Management
Perspective, Journal of Product Innovation Management, Journal of Engineering and
Technology Management, Chinese Management Studies and Corporate Governance.
Hao Jiao is the corresponding author and can be contacted at: haojiao@bnu.edu.cn
Jifeng Yang is Research Fellow in Business School, Beijing Normal University, China. Her
research interests include innovation management in the context of cultural and creative
industry.
Dr Jianghua Zhou is Associate Professor in Business School, Beijing Normal University,
China. His research interests include innovation management and strategic management
within the context of emerging markets. He has published well over 20 articles in major
refereed journals in business and management.
Dr Jizhen Li is Associate Professor in the Department of Innovation, Entrepreneurship and

Strategy, School of Economics and Management, Tsinghua University. He is also Research
Fellow and Vice Director at the Research Center for Technological Innovation at Tsinghua
University. His research interests include management of technological innovation, science
and technology policy, project management and SMEs innovation and entrepreneurship.
He has published more than 80 journal articles.
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Commercial partnerships and

collaborative innovation in China: the

Abstract Hao Jiao is based at Beijing

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2. Literature review and hypotheses

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2.2 Impact of different partnerships on firms’ collaborative innovation

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2.3 Moderating effect of technological uncertainty

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2.4 Moderating effect of firms’ dynamic capabilities

Figure 1 Research model

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Table I Demographic proﬁle of the sample (N = 370)

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1. Technology uncertainty 4.68 2.24 0.89 0.75 0.80 1.00

Figure 2 Structural model of two types of commercial partners on collaborative innovation:

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collaborave innovaon with low-dynamic capabilies

Figure 4 Moderating effect of technological uncertainty on non-business partner to

collaborave innovaon with low-technological uncertainty

Figure 5 Moderating effect of dynamic capabilities on non-business partner to

collaborave innovaon with low-dynamic capabilies

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5.2 Managerial implications

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5.3 Limitations and further research

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VOL. 23 NO. 7 2019 j JOURNAL OF KNOWLEDGE MANAGEMENT j PAGE 1449

Hagedoorn, J. (1990), “Organizational modes of interfirm cooperation and technology-transfer”,

Hagedoorn, J. (1993), “Understanding the rationale of strategic technology partnering -

Hagedoorn, J. and Schakenraad, J. (1992), “Intercompany cooperation and technological developments

Heavy, C. and Simsek, Z. (2013), “Top management compositional effects on corporate

PAGE 1450 j JOURNAL OF KNOWLEDGE MANAGEMENT j VOL. 23 NO. 7 2019

VOL. 23 NO. 7 2019 j JOURNAL OF KNOWLEDGE MANAGEMENT j PAGE 1451

PAGE 1452 j JOURNAL OF KNOWLEDGE MANAGEMENT j VOL. 23 NO. 7 2019

About the authors

VOL. 23 NO. 7 2019 j JOURNAL OF KNOWLEDGE MANAGEMENT j PAGE 1453

Dr Jizhen Li is Associate Professor in the Department of Innovation, Entrepreneurship and

PAGE 1454 j JOURNAL OF KNOWLEDGE MANAGEMENT j VOL. 23 NO. 7 2019

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