Abstract/Summary

We investigate how the firm’s board structure (i.e. CEO duality or independence) and its asset scale at the micro level, the industry’s technological intensity at the meso level, and the government’s initiatives at the macro level influence firms’ digital innovation performance in the innovation ecosystem of the Chinese manufacturing industry. Drawing on a longitudinal study of 1,098 firms sourced from the CSMAR database, we utilise a co-evolutionary multi-level model for the exploration. Our findings reveal that firms led by independent board members with large-scale assets and that have received government subsidies are more likely to achieve superior digital innovation performance. Furthermore, the impact of micro-level factors varies with technological intensity, with medium and high-tech firms showing more significant innovation performance improvements. We suggest that firms maintain a board composition with a balanced mix of independents with objective oversight and non- independents with strategic influence and allocate their resources to capitalise on emerging technological trends to perform better in innovation ecosystems. Firms should not solely depend on government support but align their resource basis and governance structures to leverage technology and incentives effectively. Policymakers should craft targeted initiatives depending on the innovation ecosystems’ technological intensity and the firms’ resource endowments.