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How does Competition by Informal Firms Affect the Innovation in Formal Firms?

Heredia Pérez, J. A., Yang, X., Bai, O., Flores, A., and Heredia, W. H. (2019). How Does Competition by Informal Firms Affect The Innovation In Formal Firms? International Studies of Management & Organization, 49(2), 173–190. https://www.tandfonline.com/doi/abs/10.1080/00208825.2019.1608402

How does Competition by Informal Firms Affect the Innovation in Formal Firms?

This study, published by Jorge A. Heredia Pérez, Xiaohua Yang, Ou Bai, Walter Heredia Heredia in International Studies of Management & Organization, 2019, applies a resource-based perspective to investigate how competition by informal firms affects innovation in formal firms in China. By analyzing survey data, collected from 1,686 Chinese manufacturing firms, we find that formal firms tend to increase their rate of innovation when faced with informal competition. However, formal firms’ access to increased global supply chain collaboration mitigates the challenges presented to their rate of innovation by the informal firms. The study presents implications for future research, practice, and policy-making.

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