Do power distance and market information foster or impede performance of Chinese new ventures?

Abstract

PurposeThe purpose of this paper is to examine the moderating effects of market growth on the relationships between power distance and new venture performance and between market information utilization in new ventures and new venture performance in China.Design/methodology/approachThis study uses content analyses and OLS regressions.FindingsFirst, power distance and market information utilization have positive effects on Chinese new venture performance. Second, in a low market growth environment, increasing power distance increases Chinese new venture performance. Third, in a high market growth environment, increasing power distance decreases, not increases, Chinese new venture performance.Research limitations/implicationsThis study contributes to the market orientation literature by examining the moderating effects of market growth on the market information utilization-performance relationship in China. This study also adds to the existing understanding of power distance and market information utilization in contingency theoretical perspective.Practical implicationsChinese new ventures operating in a high-growth market should reduce power distance. However, when operating in the low market growth industry, Chinese new ventures should increase power distance. While all Chinese new ventures should use market information to make decisions, the roles of market information are more important for Chinese new ventures operating in high market growth industries than for those operating in low market growth industries.Originality/valueThis study examines the moderating effects of market growth on the positive relationship between power distance and Chinese new venture performance and the positive relationship between market information utilization on Chinese new venture performance in the same model.