New product development and sustainable performance of Chinese SMMEs: The role of dynamic capability and intra-national environmental forces

Abstract

Despite a growing research interest in innovation strategies i.e. new product development, very few studies explore how the regional environmental mechanism is inherent in the link between new product development and sustainable business performance of small and medium manufacturing enterprises (SMMEs) in Asian countries, due to high-velocity business environments. To address this research gap, the study integrates the dynamic capability perspective, and the institutional and entrepreneurship theory in the investigation of how the distinct regional characteristics of the intra-national market in which SMMEs are embedded, along with the dynamic capability of SMMEs, influence the linkage between new product development and sustainable firm performance. Using China as the research setting, we test the research model empirically, based on 1321 samples of SMMEs selected from a nationwide survey. The new findings indicate that an SMME's regional institutional forces, regional entrepreneurial intensity and dynamic capability moderate the effects of new product development on firms' sustainable performance by mitigating the inherent inadequacy of and reliance on firm-specific resources by SMMEs. The new findings also provide the research and managerial implications for SMMEs from Asian economies conducting new product development strategies.