Inside the Virtuous Cycle between Productivity, Profitability, Investment and Corporate Growth: An Anatomy of China Industrialization

This article explores the dynamics of market selection by investigating of the relationships linking productivity, profitability, investment and growth, based on China's manufacturing firm-level dataset over the period 1998-2007. First, we find that productivity variations, rather than relative levels, are the dominant productivity-related determinant of firm growth, and account for 15%-20% of the variance in firms' growth rates. The direct relation between profitability and firm growth is much weaker as it contributes for less than 5% to explain the different patterns of firm growth. On the other hand, the profitability-growth relationship is mediated via investment. Firm's contemporaneous and lagged profitabilities display positive and significant effect on the probability to report an investment spike, and, in turn, investment activity is related to higher firm growth

How does strategic flexibility affect bricolage: The moderating role of environmental turbulence.

While most studies have viewed strategic flexibility as a capability to cope with the environmental turbulence and promote the product innovation, few of them investigate the mediating mechanism in the relationship between the strategic flexibility and product innovation. According to the resource-based view, we regard the bricolage as a concrete activity of recombining the different resources in the product development process and explore the underlying mechanism. Our results reveal that strategic flexibility has a positive and significant effect on bricolage. The effect of strategic flexibility on product innovation is partially mediated by bricolage. Furthermore, environmental turbulence moderates the relationship between strategic flexibility and bricolage positively. We contribute to the strategic flexibility research by exploring the effect of strategic flexibility on the bricolage and product innovation form a mediating perspective and offering a more nuanced and in-depth understanding of the impact of strategic flexibility. This research also provides new evidence on the effect of strategic flexibility on product innovation in transition economies such as China, where strategic flexibility is essential for firms to adapt to an uncertain environment