Unpacking how integrator state-owned enterprises respond to institutional demand tensions in complex product systems innovation

As hybrid organizations situated at the nexus of market and state logics, integrator state-owned enterprises (SOEs) face the daunting challenge of navigating competing institutional demands. In the process of CoPS innovation, such tensions coalesce into a persistent trade-off between legitimacy and autonomy. Drawing on an inductive multiple-case study of three large integrator SOEs operating in two representative CoPS domains in China, this study examines how these firms respond to legitimacy–autonomy tensions across different phases of CoPS innovation. We identify two response strategies, namely, aggregate projection and parallel coordination , that address goal conflicts in the goal-setting phase and means conflicts in the resource-allocation phase, respectively. Moreover, we propose a theoretical model illustrating how these mutually constitutive response strategies jointly enable integrator SOEs to secure legitimacy while preserving autonomy in achieving CoPS innovation. These findings deepen the scholars’ understanding of organizational responses to institutional demands, while also contributing to literature on CoPS innovation.