Impact of relationship dynamics on policy reform for sustainable innovation in public healthcare in China: Social exchange theory perspective

The Chinese government is dedicated to fostering sustainable innovation within the public healthcare and pharmaceutical sectors to safeguard public interests. However, current policies governing the pharmaceutical industry have inadequately addressed critical issues related to stakeholder dynamics and sustainable innovation performance. This study investigates how policy reform can enhance the dynamic relationships among stakeholders in China's public healthcare system, aiming to devise actionable and detailed tasks while minimizing conflicts to encourage sustainable innovation. This research presents the findings of in-depth interviews conducted with 50 participants from key stakeholders in China's public health sector, including government officials, hospital representatives, executives from state-owned pharmaceutical companies, and healthcare professionals. The findings offer valuable insights for practitioners, policymakers, and academics regarding the application of social exchange elements—such as power, trust, reputation, reciprocity, and commitment—in understanding the necessity of integrating relationship dynamics into policy design and reform within the supply chain network, all while protecting public interests. Furthermore, the study emphasizes the shortcomings of the existing policy framework and presents compelling arguments for reforms that actively involve key stakeholders in the public healthcare and pharmaceutical industries. • Explore stakeholder relationship dynamics in China's public healthcare sector for sustainable innovation & public benefits • Extend the application of social exchange theory to the analysis of policy design within complex stakeholder networks • Extend the scope of social exchange elements (power, trust, reputation, reciprocity & commitment) in a guanxi-based context • Explore the importance of informal network establishment in a guanxi-interaction • Propose a relational policy design framework emphasizing relationship observation, steering, and management