Social and strategic innovation: extending the varieties of capitalism to asian countries

Abstract

This article empirically analyzes how institutional context affects the nature of firms´ innovation—social and/or strategic—using the varieties of capitalism paradigm extended to include Asian economies. Because formal and informal institutional pressures shape the way firms behave in terms of risk-taking and opportunity-detection, it can be expected that institutional context influences the nature of innovation. An empirical analysis using a sample of 603 small- and medium-sized innovative enterprises is developed to provide a comprehensive view of how the institutional context in which a company operates determines the nature of firms´ innovation. A cross-country-cluster comparison is made using analysis of variance among Asian economies, coordinated market economies, liberal market economies, and mixed market economies. The results show that the high degree of public involvement and institutional support that characterize coordinated market economies and the normative pressures that characterize Asian economies fosters firms´ involvement with social innovation. These empirical findings support the theoretical arguments that point to institutional context as an important determinant of the nature of firms´ innovation.