“Regulative Distance and Diversity in International Innovation Teams: Mechanisms and Contingencies”
by Atilla Onuklu
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The purpose of this study is to analyze the relationship between institutional distance and international innovation connections. Globalization constantly divides the global value creation into finer slices and ironically increases the importance of ‘location’. This more-connected-than-ever global value creation impacts the composition and diversity of innovation projects. Although we know a lot about the performance implications of diversity, our knowledge about antecedents of diversity is scarce – which factors are influential in bringing different local knowledge together? This study focuses on the effect of institutional environment on the diversity of innovation projects. More specifically, we focus on regulative pillar that includes laws, rules and regulations as an important aspect of institutional environment. We facilitate from Turkey’s candidacy process to the European Union as a proxy for changing regulative distance. We follow the regulative harmonization process through a novel regulative progress index that we created (Weighted Average Regulative Progress -WARP- Index) by applying principal component analysis to the European Commission reports. Our study shows that regulative convergence does not directly affect the innovation collaborations, instead the effect is through several mechanisms and factors. We found that the significance and magnitude of relationship between diversity and regulative convergence is conditional on the direction of the connectivity, participation and origin of MNCs in the project, level of complexity of the technology involved, and the nature of the regulation that is being harmonized. This analysis contributes to the IB literature by providing a bridge between institutional factors and connectivity in innovation. It also offers insights into the influence of factors and mechanisms through which regulative harmonization affects diversity of the innovation.