Harmonising innovation: the nexus of Zhong-Yong thinking, innovation behaviour, R&D resource allocation, and exploratory innovation

Abstract

ABSTRACT Hambrick and Mason [1984. “Upper Echelons: The Organization as a Reflection of Its Top Managers.” Academy of Management Review 9 (2): 193–206. doi:10.2307/258434] identified that organisational outcomes – strategies and effectiveness – could be regarded as reflections of the values and cognitive bases of top executives in the organisation. However, theory in entrepreneurship literature on how CEOs' characteristics transform resources to create value has been minimal. On the basis of Hambrick and Mason's ‘upper-echelons’ perspective, the present study examines the influence of the Zhong-Yong thinking style of Chinese entrepreneurs on firm-level exploratory innovation. Our theorisation sheds light on the intermediate processes linking Zhong-Yong thinking style with exploratory innovation. Results of a structured time-lagged (two-wave) survey investigation of 144 manufacturing SMEs in China indicate that the Zhong-Yong thinking style of Chinese CEOs increases their innovation behaviour. Furthermore, the innovation behaviour of entrepreneurs leads to the allocation of R&D resources, which increases exploratory innovation in Chinese SMEs.