Institutions, innovation and performance in Guangdong firms: The role of entrepreneurial orientation and environmental turbulence

This study combines the institution-based perspective and the innovation systems literature to examine the role of public policies in the entrepreneurship-innovation-performance relationships. It does so by presupposing a key mediating role for entrepreneurial orientation and by introducing environmental turbulence as a moderator. Data from a sample of 166 Guangdong Province manufacturing firms are used to test hypotheses, which distinguish between institutional pressures and incentives. Findings reveal the lesser relevance of institutional pressures whereas a more virtuous relationship between institutional incentives, entrepreneurial orientation and both innovation and overall performance emerges, especially when environmental turbulence increases. This is particularly clear with reference to firms’ overall performance. These findings are of theoretical and practical relevance for the study of the effects of public policies as regards their nature and the policy design mix.