Firm Capabilities and Performance Institutional Perspective on Foreign and Local Firms in China

This study focuses on the performance implications of firm capabilities in China's emerging economy. Specifically, we investigated the effects of marketing, technological, and production capabilities on firm performance from the institutional perspective with the traditional resource-based view. Using four-year longitudinal data of both local private firms and foreign wholly owned subsidiaries in China, we found that firm capabilities demonstrated differential effects on financial performance and market performance for local and foreign firms. Moreover, the performance impact of firm capabilities was moderated by the institutional environment.