Environmental uncertainty, participative corporate political activity and radical innovation in China: a sensemaking perspective

Abstract

Purpose Drawing on a sensemaking perspective, this study aims to theoretically and empirically investigate the effects of participative corporate political activity (PCPA) on radical innovation and how regulatory uncertainty and technological uncertainty affect firms’ choice of PCPA as well as its effectiveness on radical innovation. Design/methodology/approach Hierarchical regression analyses were conducted to test the research model based on survey data collected from 227 Chinese manufacturing firms. Findings The results indicate that PCPA has a significantly positive effect on radical innovation. Both regulatory and technological uncertainty are positively related to PCPA. In addition, regulatory uncertainty strengthens the positive relationship between PCPA and radical innovation, whereas technological uncertainty weakens this relationship. Practical implications This study reveals that firm managers should be mindful that PCPA is beneficial to firms’ radical innovation activities in China. Additionally, although regulatory uncertainty and technological uncertainty can drive firms to engage in PCPA to cope with the ambiguity they experienced, managers should also be alert to the complicated role of environment forces in enlarging or discounting the positive effect of PCPA on radical innovation. Originality/value The findings offer fresh insights into the use of PCPA to manage the uncertain external environment when pursuing radical innovation activities in China.