The Impact of Business Acquaintanceships on Innovation From the Perspective of “The Differential Mode of Association”: Evidence From China ESIEC

The aim of this study is to discuss the impact of firm’ business acquaintanceships on innovation. We adopt a sociological perspective and apply the concept of “The differential mode of association” to construct a theoretical framework to explain the principle of firms’ business acquaintanceships on innovation. To provide real-world evidence, we also empirically test the theoretical hypotheses using ESIEC data and some econometric models. The results reveal that: (1) Business acquaintanceships have a significant positive impact on innovation, but the impact of business acquaintanceships on product and process innovation is asymmetric. (2) Under the theory of “The differential mode of association” and the principle of individual pragmatism, profitability mediates the relationship between business acquaintanceships and innovation. The business acquaintanceships can improve profitability, nevertheless profitability hinders innovation. (3) Under “The differential mode of association,” the government and shareholders acquaintanceships have moderating effects. However, once the government and shareholders acquaintanceships are involved in business acquaintanceships, they have a negative impact on innovation within firms. (4) Individual heterogeneity in entrepreneurs’ gender, government experience, and prior entrepreneurial experience also affects the impact of business acquaintanceships on innovation. This study emphasizes the impact of social relationship structures on business acquaintanceships and innovation, further provides a new research perspective and marginal contributions in terms of theoretical and empirical evidence. JEL Classification: B55 L26 M20 O32.