Social Innovation in Emerging Economies: An Ecosystem Built on Collaboration and Knowledge Sharing

We take a new perspective to conceptualize and empirically validate firm and government-sponsored-institutions (GSIs) collaboration for small and medium enterprises (SMEs) as a vital form of social innovation in emerging economies. Moreover, we identify a social innovation ecosystem in which firm-GSI collaboration plays crucial roles in nurturing reciprocal knowledge sharing. Specifically, GSIs provide SMEs research support and knowledge through collaborating with SMEs in improving their economic and social innovation output, which in turn, motivates SMEs to give back to the society through their subsequent knowledge sharing with other firms. We develop a framework to theorize the interdependent relationships between firm-GSI collaborations, economic and social innovation outputs, and subsequent knowledge sharing of participating firms. In addition, we identify internal research and development (R&D) strategy and management structure as two boundary conditions to study the effects of firm-GSI collaboration on innovation output. We test our framework using data on collaboration between SMEs and GSIs in Mexico. We find that the positive effect of their collaboration is stronger on social than economic innovation output. Although R&D intensity has a stronger mitigating effect on the positive effect of firm-GSI collaboration on economic than social innovation output, a decentralized management structure strengthens the positive effect of collaboration on social than economic innovation output. Finally, both the positive direct effect on knowledge sharing and the mediation effect are stronger for social than economic innovation output. Overall, our findings offer important insights into the theoretical and managerial implications of both firm-GSI collaboration and social innovation in emerging economies.