The Impact of Virtual Integration on Innovation Speed: On the View of Organizational Information Processing Theory

Abstract

In the current environment, rapid innovation has become an essential source of time-based competitive advantage. Cooperation is an effective way to achieve rapid innovation. Inter-firm virtual integration is an emerging cooperation mode through information and communication technology (ICT) support. Its impact on rapid innovation needs to be further confirmed. Based on the organizational information processing theory, this work explores the effects of virtual integration on product innovation speed and how guanxi moderates the relationship of virtual integration on innovation speed. Samples of Chinese manufacturing enterprises provide evidence in this study. The results show that inter-firm electronic coordination and collaboration, as two dimensions of virtual integration, play active roles in quickening the product innovation speed. However, these effects become weaker for firms with close guanxi ties. This study provides new evidence for the relationship of inter-firm cooperation on product innovation speed. The results once again confirmed the critical role of guanxi in China's business activities.