Network-based resource capital such as political capital, social capital, and reputational capital are critical in providing firms with special access to various resources and legitimacy in emerging markets. However, how these generic nonmarket forms of capital are transformed into value-adding, industry-specific, and firm-specific uses, which subsequently enhance firm competitiveness, remained unanswered. Adopting a dynamic capability approach, this paper posits that corporate entrepreneurship performs a unique role of resource capital configuration and transformation in emerging market firms by continuously renewing firm competences so that congruence with the changing environment can be achieved. Building on this conceptualization, we argue that the positive effects of network-based resource capital on firm performance are channeled through the resource configuration process given by various corporate entrepreneurial activities such as product and organizational innovations as well as new venturing. Empirical evidence of the proposed mediation model is obtained from a survey of established firms in China.
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