Managerial Ties and Firm Innovation in Transition Economies

In transition economies—those moving from centrally planned to market-oriented systems—firms confront institutional instability, evolving regulations and under-developed financial markets. Managerial ties, encompassing relationships with political actors, business partners and regulatory agencies, emerge as vital conduits for securing resources, information and legitimacy. Business ties help firms access market knowledge, supplier networks and distribution channels; political ties offer regulatory support, subsidies and reduced bureaucratic friction. Together, these relationships influence innovation by shaping the firm’s capacity to identify opportunities, marshal external knowledge and protect intellectual investments. Yet managerial ties are double-edged: overly close political linkages can stifle entrepreneurial autonomy, while excessive reliance on business networks may limit novel recombination of ideas. The net impact on innovation performance is contingent on firm-level absorptive capacity, the dynamism of the external environment and the quality of institutional support. In practice, firms that calibrate the intensity and diversity of their ties are better able to engage in exploration, rapid product development and sustainable innovation pathways.

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Managerial Ties and Firm Innovation in Transition Economies publication trend

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Technical terms

Managerial ties: The network of personal and organisational relationships that managers cultivate with political bodies, industry partners and regulatory agencies.

Business ties: Collaborative links with suppliers, distributors, competitors and customers that facilitate information exchange and resource sharing.

Political ties: Connections with government officials or agencies that can confer regulatory advantages, policy insight and institutional legitimacy.

Transition economy: A national economy undergoing structural change from a centrally planned system toward market-based operations.

Absorptive capacity: A firm’s ability to recognise, assimilate and exploit external knowledge for innovation and competitive advantage.

References

1. Interactions Among Factors Influencing Product Innovation and Innovation Behaviour: Market Orientation, Managerial Ties, and Government Support. Sustainability (2019).
2. Antecedents and Innovation Performance Implications of MNC Political Ties in the Chinese Automotive Supply Chain. Management International Review (2018).
3. More is less? The curvilinear effects of political ties on corporate innovation performance. Technological and Economic Development of Economy (2019).