Global networks as a mode of balance for exploratory innovations in a late liberalizing economy

Zaheer Khan*, Rekha Rao-Nicholson, Shlomo Y. Tarba

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

59 Citations (Scopus)


This article suggests that under weak institutional arrangements, adverse economic conditions, and institutional voids in a late liberalizing economy, local firms that are part of the global value chains of multinational enterprises develop international networks as a balancing strategy to engage in exploratory innovations. We argue that local firms do so in order to counter the negative influences of local institutions on exploratory innovations. Using exploratory in-depth qualitative analysis, we study the suppliers of motorcycle parts in Pakistan that are working with leading Japanese and Chinese motorcycle assemblers. The results suggest that in adverse economic situations local institutional factors can sustain only the development of exploitative innovations. As a balancing strategy, motorcycle part suppliers develop international networks with global Tier 1 suppliers, international trade fairs, and international institutions. This strategy helps circumvent the negative influence of home institutional factors on developing exploratory innovations. Our study highlights the importance of global networks as a balancing strategy for creating exploratory innovations by firms in a late liberalizing economy.

Original languageEnglish
Pages (from-to)392-402
Number of pages11
JournalJournal of World Business
Issue number3
Early online date17 Oct 2016
Publication statusPublished - Apr 2018

Bibliographical note

The authors would like to thank the editors and three anonymous reviewers for their extremely insightful comments that greatly improved this paper. We also thank Oded Shenkar and the two anonymous reviewers of the Academy of International Business Annual meeting 2015 held in India for their valuable comments on the earlier version of this paper.


  • Context
  • Exploitative innovations
  • Exploratory innovations
  • Institutions
  • International networks
  • Late liberalizing economy
  • Motorcycle industry
  • Pakistan


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