Social Trust and Open Innovation in an Informal Economy: The Emergence of Shenzhen Mobile Phone Industry

Yu-Chun Chen and Min-Nan Chen
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Yu-Chun Chen: Department of Business Administration, National Formosa University, Yunlin 63201, Taiwan
Min-Nan Chen: Department of BioBusiness Management, National Chiayi University, Chiayi 60054, Taiwan

Sustainability, 2020, vol. 12, issue 3, 1-18

Abstract: This study examines how social trust facilitates firms’ collaborative efficiency in an informal economy. We extend the open innovation theory to explain the straightforward role of social trust in the Shenzhen mobile phone industry. This single case study yields two principal findings. First, social trust fosters the efficient integration of value chains for mobile phone development. Four types of informal entrepreneurs with high social trust built on homogenous sanctioned ethnic groups (i.e., Fujian, Hunan, Chaoshan, and Wenzhou) collaboratively conform to the chip vendors, independent design houses, integrators, manufacturers and channel retailers in the Shenzhen mobile phone industry. These four groups of informal entrepreneurs achieve ethnic legitimacy by organizing the value chains with mobile feature phones built on Shenzhen mobile phone modes. Second, social trust among the four sanctioned ethnic groups is a critical determinant for shortening the time-to-market of new products and catalyzes product specialization to effectively respond to market needs in the Shenzhen mobile phone industry. Finally, we discuss the implications of our findings for research on social trust and open innovation in informal institutions.

Keywords: open innovation; informal economy; Shenzhen mobile phone industry; social trust (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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