MANAGERIAL GUANXI TIES, KNOWLEDGE CREATION, AND FIRM INNOVATION: EVIDENCE FROM CHINA.

This paper proposes and examines an indirect link between managerial guanxi ties and firm innovation. Empirical results show that knowledge creation processes (knowledge exchange and knowledge combination) fully mediate the relationship between managerial guanxi ties (business ties and political ties) and firm innovation (product innovation and process innovation). While business ties and political ties exert different impacts on knowledge creation processes and firm innovation, knowledge exchange and knowledge combination vary in their effects on product innovation and process innovation.