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Creating competitive advantage Creating firm’s

competitive
through network ties, advantage

entrepreneurial orientation and

intellectual capital
Chih-Hsing (Sam) Liu Received 18 February 2020
Revised 6 June 2020
Department of Tourism Management, 5 August 2020
National Kaohsiung University of Science and Technology, Kaohsiung, Taiwan 28 September 2020
Accepted 10 November 2020

Abstract
Purpose – This study attempts to explore how a cultural and creative firm’s competitive advantages can be
maintained through the accumulation of intellectual capital and entrepreneurial orientation. Another goal of
this study is to identify the different mechanisms of network ties to explore the interrelationships between
organizational capital and competitive advantage in the context of Taiwan and China.
Design/methodology/approach – Study 1 and study 2 settings are applied, and 786 samples (i.e., 418
samples from Taiwan and 368 samples from China) are used to examine the proposed model.
Findings – Study 1 reveals that entrepreneurial orientation may influence the organization capital through
human capital and social capital, which discloses the mutual relationships of intellectual capital. Further, the
results of study 2 confirm the mediating role of intellectual capital that links the relationships between
entrepreneurial orientation and competitive advantage. Specifically, this study also discovered that firms with
more network or political ties (e.g. the Chinese samples) and business ties (e.g. the Taiwanese samples) tend to
amplify the effects of organizational capital on competitive advantage.
Practical implications – According to our empirical results, cultural and creative managers should build a
learning mechanism to encourage and develop entrepreneurial orientation and intellectual capital capacities
and to provide means of understanding of customers’ changing expectations. Hence, in enhancing
entrepreneurial orientation and intellectual capital cultural and creative firms can develop a competitive
advantage over competitors. Our findings also offer new insight to support further studies of the benefits of
managerial ties for firms operating in Guanxi cultural settings in Chinese contexts.
Originality/value – Most previous studies on tourism strategies have disregarded the impacts and different
roles of government (e.g. political ties) and business (e.g. business ties) forces on cultural and creative firms’
competitive advantages, suggesting a need to address social network issues in response to dynamic tourism
environments. Therefore, this study examines differences in network ties and the differences observed between
China and Taiwan in the context of Chinese cultural and creative firms.
Keywords Intellectual capital, Entrepreneurial orientation, Network ties, Competitive advantage
Paper type Research paper

1. Introduction
With increasing competition in the tourism industry, firms must acquire valuable, inimitable,
non-substitutable, rare and intangible resources to achieve competitiveness and gain a
competitive advantage (Liu, 2018; Liu and Yang, 2020; Massaro et al., 2020). Previous studies
have identified entrepreneurial orientation (EO) as a critical intangible resource for firms and
a predictor of firm performance that involves taking risks, engaging in innovation and taking
proactive action (Seilov, 2015). Ireland et al. (2003) asserted that EO helps firms effectively
identify market opportunities and create wealth. EO not only encourages entrepreneurial
action to accept challenges (Mousa and Wales, 2012; Shepherd et al., 2015) but also considers
how to better employ information and processes to pursue a high level of personal success
(Mitchell et al., 2007). However, given the complexities and changes that have been occurring Management Decision
in tourism environments, it is likely that additional efforts extending beyond those related to © Emerald Publishing Limited
0025-1747
EO are needed to facilitate optimal performance. Furthermore, intellectual capital (IC) is DOI 10.1108/MD-02-2020-0191
MD widely recognized as another valuable factor that influences firm competitiveness in creating
entry barriers for competitors (Sardo et al., 2018). Cuozzo et al. (2017) asserted that IC helps
firms create value and produce greater profitability. In other words, IC-related combinations
of knowledge asset values and resources could result in greater profitability (Roos, 2017). The
importance of IC has been widely recognized as an extension of the resource-based view of the
firm (Guthrie et al., 2015). With regard to cultural and creative industries, 84.85% of such
firms are small and medium-sized enterprises (SMEs) that, without strong government
resource inputs, well-trained human capital and experienced management knowledge,
require IC to create a competitive advantage (Liu, 2018). However, despite the importance of
EO and IC for firms, few studies have discussed the relationships between EO and IC, which
must be addressed further (Mehdivand et al., 2012).
Recently, with the growing popularity of Chinese culture and with China becoming an
increasingly appealing destination (Zhou et al., 2013), cultural and creative industries have
become the “next tourism star” in attracting government and business support and
investment as investment in cultural and creative industries can not only facilitate cultural
growth but also accelerate urban economic growth (Tsang, 2011). Despite the need to focus on
cultural and creative industry development, few studies have analysed the differences
between China’s and Taiwan’s cultural and creative firms, which has led some tourism
researchers and practitioners to call for investigations into the effects of cultural and creative
firms on these two regions. Yu (1997) found that because China and Taiwan politically
separated in the 1940s, the tourism strategies and processes of government decision-making
adopted in the two settings have differed for a long time. However, most of the previous
tourism strategy studies have disregarded the impacts and different roles of government (e.g.
political ties) and business (e.g. business ties) forces on cultural and creative firms’
competitive advantages, suggesting that there is a need to address social network issues in
response to dynamic tourism environments (Liu, 2018). Therefore, this study examines the
differences in network ties between China and Taiwan in the context of Chinese cultural and
creative firms.
The prior tourism studies with a focus on Chinese culture are limited but offer two main
discoveries that must be addressed further. First, the Taiwanese government has relied on
liberation and internalization and has thus depended heavily on business relationships with
social exchange partners to acquire necessary resources and to maintain a competitive
advantage (Li et al., 2018). In other respects, firms in China rely heavily on government
support and resource inputs to develop business capabilities; thus, government network ties
have become central to firm operations (Chen et al., 2018). These phenomena are especially
obvious in the tourism industry, and Zhao and Timothy (2015) proposed that business and
political network ties have transformational impacts in Taiwan and China and are critical in
shaping the probability of success or failure in highly competitive environments. The authors
propose that tourism scholars have yet to reach a consensus on this multifaceted
phenomenon. Second, Chinese culture has been disseminated abroad for nearly 5,000
years, and the country has been ranked as the most popular destination for local and
international tourists to visit with tourists wishing to learn more about the country or to
experience its regional history, daily lifestyles, civilization and folk art (Chang and Liu, 2009).
Business opportunities also enhance the entrepreneurial orientation (EO) of cultural and
creative firms and drive market performance.
Integrating the EO and IC perspectives, this study first identifies the role of EO, which
may influence the diverse critical attributes of IC, and it further examines the roles of external
managerial ties (e.g. business and political ties) as an important moderating function that
may influence firms’ competitive advantages. In related studies, tourism scholars have
examined various moderating effects (Li and Chang, 2016) and developed mediating models
(Subramony et al., 2018) to reconcile the above-noted hypotheses and to determine how
competitive advantages can be created through social networks. In reference to tourism Creating firm’s
studies, Liu (2018) asserted that, as a strategic tool, network ties help businesses detect competitive
changes in the environment and acquire market resources. However, fewer tourism and
hospitality studies have determined how different network ties influence the relationships
advantage
between IC and competitive advantages in China and Taiwan via comparisons. Thus, the
goal of this study is to make additional contributions to the current tourism literature and to
identify how the decisions, roles and mutual relationships related to EO shape competitive
advantages. We also examine this unsolved issue by considering Chinese and Taiwanese
cultural and creative firms’ viewpoints when extended to other businesses or government
entities. Figure 1 depicts the proposed model.
Figure 1 presents a theoretical conceptual framework of how EO relationships affect
competitive advantages and of the anticipated propositions that arise from an integrated
perspective for China and Taiwan. For the first part of our aggregate sample examination, we
propose that EO may influence different facets of IC. We argue that the EO of cultural and

Intellectual
Human
Capital
Capital

H1
Entrepreneurial Organization
orientation Capital
H2

Social
Capital

Risk
Innovation Proactiveness
Taking

Study 1 The Relationships Between Intellectual Capital(IC) and Entrepreneurial

Orientation (EO)

Business
Social Ties
Taiwan Capital
H3
H4
Entrepreneurial Organization Competitive
orientation Capital Advantage

H5
Human
China Capital Political
Ties
Figure 1.
Proposed model and
hypothesis of the study
Study 2 The Relationships Between IC, EO and Network Ties
MD creative firms may influence organizational capital development through human and social
capital. In the tourism and hospitality literature, building on the resource-based view (RBV),
Jogaratnam (2017) formulated EO as a firm’s strategic posture and identified the three
dimensions of innovation, risk taking and proactiveness. Using a tourism organization as a
case, Liu (2018) theoretically divided IC attributes into human, social and organizational
capital and showed how the features of each of these attributes influence organizational
learning and knowledge transfer. This study extends the previous literature and elaborates
on Jogaratnam (2017) and Liu’ (2018) frameworks, formulates first- and second-order
hypotheses modifying the conceptual model and subjects these hypotheses to empirical
testing based on a survey of 786 cultural and creative firms in study 1. The second part of the
study applies a mediation-moderation model showing that human and social capital may
influence cultural and creative firms’ competitive advantages through organizational capital.
More specifically, based on differences in political systems and business environments, we
identify differences in the moderating roles of network ties in China and how this creates
advantages. Based on the different processes for China and Taiwan, this study suggests that
(1) business ties strengthen the relationships between organizational capital and competitive
advantages in Taiwanese cultural and creative firms and (2) political ties strengthen the
relationship between organizational capital and competitive advantages among Chinese
cultural and creative firms. This research context is compelling because exhibiting initiative
serves as a key facet of managers’ approaches to network connections. Given the complex
nature of cultural and creative industrial environments, network connection strategies may
help firms successfully acquire required resources, which may also help generate and
maintain competitive advantages over competitors (Mart
ınez-P
erez et al., 2016). Lee and Kim
(2017) asserted that firms’ social network strategies highly influence organizational success
and that, noticeably, throughout an organization’s intangible capital development, business
and political ties might help firms maximally exploit and allocate their limited valuable
resources to impact firm competitive advantage (Ma et al., 2019). Thus, this study addresses
gaps in the tourism literature and extends the past work, which has mostly examined
mechanisms of network ties by studying an empirical research setting with a focus on the
different effects of network ties on the political systems in Taiwan and China.

2. Literature review/hypotheses development

2.1 The relationship between entrepreneurial orientation (EO) and intellectual capital (IC)
Given the substantial differences and changes in Chinese cultural systems, in the following
hypotheses development section, this study briefly describes the concepts and assumptions
of EO and IC and then draws on Chinese cultural conceptions to describe the potential
differences between China and Taiwan that may underpin how Chinese cultural and creative
firms interpret EO- and IC fit. First, entrepreneurial orientation (EO) refers to a firm’s strategic
orientation and captures established firm decision-making processes, strategy formulating
practices, managerial styles and philosophies and entrepreneurial activities (Liu et al., 2020;
Liu and Lee, 2015). In the field of tourism and hospitality, EO helps firms to acquire external
support and sustain long-term competitive strategies (Peters and Kallmuenzer, 2018). In
Chinese cultural and creative firms in particular, entrepreneurs are heavily embedded in the
host community and act as bridges between visitors and the local community with a
particular focus on traditional cultural sustainability (Liu, 2018; Mart
ınez-P
erez et al., 2019). In
recent tourism and hospitality studies, the dimensions of innovation, proactiveness and risk
taking are widely recognized in examinations of crucial entrepreneurial behaviours (Fu et al.,
2019; Jogaratnam, 2017; Liu et al., 2020; Liu and Lee, 2015; Peters and Kallmuenzer, 2018).
Second, intellectual capital (IC) refers to the operations and valuable resources that are
embedded in organizations such as the knowledge, capabilities and skills that firms can use to
generate value and competitive advantage (Sardo et al., 2018). The synergetic features of IC Creating firm’s
are representative of human (e.g. employees’ capabilities, knowledge, skills, capabilities and competitive
know-how); social (e.g. cross-cutting interfirm relationships developed over time that provide
a basis for mutual trust, collaboration, interaction and cooperative action in network
advantage
communities) and organizational capital (e.g. established valuable knowledge, inimitable
capabilities and codified experience embedded in organization-level capabilities that can help
employees address problems or perform their work well) and have been widely used in the
previous studies measuring IC (Reed et al., 2006; Subramaniam and Youndt, 2005). The first
goal was to analyse the relationships between EO and different attributes of IC.
First, in examining the relationship between EO and human capital, Javalgi and Todd
(2011) found that critical attributes of EO such as innovation, proactiveness and risk taking
may be heavily influenced by internal working environmental factors such as human capital
and organization. The early development of managers’ entrepreneurial culture positively
influences other followers’ or employees’ pursuits and encourages them to enhance their
problem-solving capabilities (Irwin et al., 2018), allowing firms to build knowledge absorptive
capacity and to develop their own organizational capital (Garc
ıa-Villaverde et al., 2018).
Especially in tourism and hospitality organizations, with rapid changes in customers’ needs,
tourism firms must screen market trends and react quickly in responding to such needs; thus,
such firms encourage their employees to focus on educational development, acquiring
experience and gaining practical job-related training to satisfy customers and pre-empt
competition (Jogaratnam, 2018).
H1. Human capital mediates the positive effect of entrepreneurial orientation on
organizational capital.
Second, the relationships between EO and IC, which are expected to provide a more detailed
explanation of increasingly complex processes of international tourism and hospitality
trends and competition, reveal deep insights into EO development and effects in the context
of developing countries according to the existing literature (Liu, 2017; Zhao et al., 2011). The
concept of social capital used in reference to tourism organization development assumes that
entrepreneurship resources embedded in firms’ social contacts and relationships can be
mobilized to support organizational capabilities (Liu and Lee, 2015). To support the survival
and growth needed by EO tourism and hospitality firms, embedded social capital is required,
and as such social relationships can act as catalysts to help firms develop inimitable
capabilities (Campopiano et al., 2016). Given the specific benefits derived from critical internal
and external social connections (e.g. knowledge and information exchange among employees,
internal and foreign market opportunity exploration and identification; advice and
experience sharing and mutual trust and loyalty from third parties), we expect the
mediating role of social capital in organizational capital to influence EO impacts outward.
Such mediating mechanisms appear to serve as critical attributes in the delivery of EO
concepts (Chaston and Sadler- Smith, 2012) and to play an important role in enhancing the
benefits of establishing reciprocity and moral obligation among employees (Liu and
Lee, 2015).
H2. Social capital mediates the positive effect of entrepreneurial orientation on
organizational capital.

2.2 The mediating role of organizational capital that link relationships between human and
social capital and its impacts on competitive advantage
From the perspective of human capital development, managers’ educational background and
experience are likely to enhance an organization’s ability to communicate or interact with
internal or external partners and to build on its competitive advantages (Sipe, 2016).
MD Managers with more skills, education and experience are more likely to seek ways to help an
organization implement market strategies and knowledge (Beer and Eisenstat, 1996).
Consequently, such improvements can lead to organizational competitiveness, which is
regarded as a form of self-improvement in enhancing completive advantages (Irwin et al.,
2018). Organizations with more human capital better identify market opportunities when
extending external connections and exchanging new information with outsiders, thereby
building capital stock. In addition, managers with more capabilities and experience have
more confidence in their work (Ballantine et al., 2018; Liu et al., 2018). Thus, in building human
capital, managers offer more skills in helping employees become more creative and willing to
share knowledge and improve overall organizational capabilities (Liao et al., 2018). However,
such employees also accept the demands of experienced managers who are competent and
skilled (Jogaratnam, 2018). Therefore, when more human capital is present during
organizational development, skills and social experience not only help an organization
accumulate capital but also promote organizational competitiveness.
Similarly, social capital mediates organizational capital and competitive advantages.
From a social network perspective, the critical attributes of social capital such as social
interactions, network ties, mutual trust and value creation are regarded as principal drivers in
helping organizations access novel information that can offer advantages and opportunities
relative to competitors (Liu, 2018). During the generation of competitive advantages, social
capital acts as a foundational mechanism by allowing firms to more efficiently connect and
access valuable knowledge in their efforts to improve organizational capabilities (Chen et al.,
2018). Moreover, social capital reveals information regarding how to succeed in highly
competitive institutional environments not only by improving information asymmetries for
an organization but also by enabling an organization to realize more innovative and
promising ideas with high potential to reduce information searching costs and to create
competitive advantages for an organization (Grilli et al., 2018).
The above works propose that human and social capital influence competitive advantages
mainly through an organization’s capital development. That is, human and social capital in
cultural and creative organizations acts as a valuable intangible asset in facilitating the
effective development of organizational capital, which in turn enhances an organization’s
competitive advantage. Thus, in combination with the previous works, this study proposes
that organizational capital plays a mediating role in relationships between human/social
capital and competitive advantage. The following hypotheses are thus proposed.
H3a. Organizational capital mediates the positive effect of human capital on competitive
advantage.
H3b. Organizational capital mediates the positive effect of social capital on competitive
advantage.

2.3 The moderating roles of business and political ties that link relationships between
organizational capital and competitive advantage under different Chinese settings
With the increasing liberalization and internalization of Taiwan’s industrial environment,
firms must develop business ties with suppliers, customers and competitors to access new
information, feedback and opportunities to survive and grow (Lee, 2019; Wang and Chen,
2018). Liu (2017) asserted that business ties enhance the speed of intellectual capital
accumulation in firms. Extensive business ties allow an organization to detect market
opportunities and to tap into a network’s valuable resources embedded in extensive
connections, thereby enhancing the organization’s ability to attain or acquire rare resources,
information and news (Lee, 2019). Especially in Taiwan’s cultural and creative industries,
business ties add value for organizations by creating opportunities to access rare resources or
new information such as managerial and personalized interactions and connections, thereby Creating firm’s
allowing firms to shape organization capabilities and to eventually build competitive competitive
advantages over competitors (Liu, 2017). Thus, business ties can strengthen an
organization’s capabilities and facilitate its capital development to enhance information
advantage
exchange or opportunity exploration and to better meet organizational goals in creating a
competitive advantage. Accordingly, a positive interaction effect of business ties and
organizational capital on competitive advantage is hypothesized.
H4. The effect of organizational capital on organizational competitive advantages is
enhanced when perceived business ties are stronger.
Alternatively, political ties act as critical attributes in influencing business performance
(Chen et al., 2018). Especially in emerging economies such as China, the formation of strong
relationships with governmental entities not only enhances the likelihood of rare resource
attainment and helps organizations to survive but such relationships also help firms identify
opportunities and improve firm performance (Zhang et al., 2015). When facing a dynamic
environment, firms must improve their learning capabilities and operation productivity
levels to mitigate uncertainty (Chaston and Sadler-Smith, 2012). Political ties serve as an
effective means of enforcement by enhancing political legitimacy and status mechanisms to
mitigate environmental uncertainty and to improve the reputation of an organizational
network (Sheng et al., 2011). With strong government relationships, firms can avoid engaging
in unlawful behaviours and access valuable market information when business
environments are ineffective. Moreover, in highly competitive industrial environments,
inefficient markets significantly increase the costs of accessing valuable information, which
can result in a lack of competitiveness. This highlights the importance of political ties in
ensuring business transactions and in preventing unlawful and unexpected competition
(Zhang et al., 2015). In particular, the prior tourism and hospitality studies suggest that
political ties are more critical to the strength of firms’ marketing strategies and problem-
solving skills in pursuing competitive advantages in Chinese contexts (Liu, 2017). Thus,
maintaining political connections to improve markets benefits the organizational learning
process and creates a competitive advantage (Chen et al., 2018).
H5. The effect of organizational capital on organizational competitive advantages
increases when perceived political ties are stronger.

3. Methodology
3.1 Sample
For study 1, we selected cultural and creative firms to examine the relationship between EO
and IC for several reasons. First, given the increasing level of attention that has been paid to
Chinese culture and to the complex nature of the tourism industry, it has been argued that the
promotion of urban culture and novelty has become an urgent direction for research and has
created profitable opportunities for cultural and creative firms (Liu, 2018). The expansion of
business opportunities also comes with more risk, requiring EO to integrate appropriate
business strategies based on governance mechanisms and a strategic vision to measure
environmental risks (Esfandiar et al., 2019). Chaston and Sadler-Smith (2012) suggested that
the cultural and creative industries serve as an appropriate sample for exploring
entrepreneurial orientation and firms’ capabilities to measure environment risk. Second,
Chinese culture presents attributes insofar as it represents the characteristics of creative
industries (see Liu, 2018). Third, as an intangible asset for cultural and creative firms, IC is
accountable for business failure and success. Thus, our sample of cultural and creative firms
best represents the relationships between EO and IC. In generalizing the findings of this
MD study and collecting a representative sample, we use a sample for the northern, central and
southern regions of a cultural and creative park in Taiwan, and we distributed the
questionnaire across Fujian Province, China. For the questionnaire, our research assistants
used a face-to-face data collection method to deliver the survey to the owners and managers of
each cultural and creative firm. In total, 1,000 surveys were sent out, and 786 fully completed
and useable surveys were collected, yielding a 78.6% response rate. Table 1 presents
demographic information for the participants.
Regarding study 2, Chinese culture is typically characterized as a monolithic entity, and
relatively few studies on tourism and business management comparing Taiwan and China
have been conducted (Leng, 2018; Lu et al., 2003). Despite their similar Confucian culture and
historical development, Taiwan and China have established distinct political and cultural
features over their 60 years of separation since 1949. As argued by Lin and Kuo (2018), these
distinct political and cultural features have in turn shaped observable patterns in
organizational behaviour, and the identification of such organizational behaviour provides
a more meaningful lens for use in tourism and hospitality studies. In terms of tourism
organizations, the social network components of cultural and creative firms and business
decision processes may vary to reflect the sociocultural specificities of the two societies (Lu
et al., 2003). Thus, this study’s cetology examined cultural and creative firms in China and
Taiwan to measure differences in organizational behaviours and network ties and to
demonstrate how business and political ties influence the relationships between IC and
competitive advantage.

3.2 Variables
The measured items were given in Chinese and translated and selected from famous
international journals of tourism, hospitality, business and organization management
originally written in English. Further, to ensure that the employed scales confirm reliability
and that the validity tests were understandable to the participants, three professional
translators with extensive experience in tourism-related research were asked to help us
complete the “translate-back translate” process based on the “double blinded principle”
(Yidong and Xinxin, 2013). Then, five cultural and creative firms’ managers were invited to

Items Frequency % Items Frequency %

Gender Company history(years)

Male 350 44.5% 1–5 389 49.5%
Female 436 55.5% 6–10 231 29.4%
Age 11–20 123 15.7%
1. Below 20 12 1.5% ∼21 27 3.3%
2. 21–30 282 35.9% Experience(years)
3. 31–40 405 51.5% Below 1 year 60 7.6%
4. 41–50 75 9.5% 2–5 years 478 60.9%
5. Above 50 12 1.5% 6–10 years 191 24.3%
Education Above 11 years 57 7.5%
1. Middle School 2 0.3% Position in organization
1
2. Senior high school 40 5.1% High level managers 404 51.4%
2
3. University 665 84.6% Middle level managers 310 39.4%
Table 1. 3
Background 4. MBA or above 79 10.1% Low level managers 72 9.0%
information on the Note(s): 1High level managers include senior executive team members such as chairmen, general managers
examined cultural and and chief financial officers
2
creative firms Mid-level managers include department heads, project supervisors, team leaders and peer managers
(N 5 786) 3
Low level managers include general managers and others
complete the Chinese survey and to provide us with constructive comments on ways to Creating firm’s
modify unclear sentences (Liu, 2018). All measurement items for each variable were estimated competitive
on a 7-point Likert scale with scores ranging from: (1) “strongly disagree” to (7)
“strongly agree”.
advantage
To confirm that the developed concepts were suitable for study 1, the proposed model was
applied via a confirmatory factor analysis (CFA) to measure the second-order factor of EO
(e.g. with sub-dimensions innovation, proactiveness and risk taking) and the first-order factor
of IC (i.e., social, human and organizational capital) to ensure all of the dimensions’
measurement items were loaded above the standard (Fu et al., 2019). In the CFA test model,
the level of significance of all factor loadings was set to p < 0.001. The adaptability test results
are as follows: χ 2 5 636.161, df 5 221, χ 2/df 5 2.879, CFI (comparative fit index) 5 0.958,
adjusted goodness-of-fit index (AGFI) 5 0.917, goodness-of-fit index (GFI) 5 0.933,
incremental fit index (IFI) 5 0.956 and RMSEA (root mean square error of
approximation) 5 0.049, exceeding the suggested accepted level for structured equation
modelling (SEM) proposed by Hair et al. (2006). The final column of Table 2 shows that the
values of composite reliability (CR) ranged from 0.803 to 0.864, exceeding the recommended
standard of 0.6 (Liu, 2018). Other indexes of the average variance extracted (AVE) were also
used to measure the survey’s validity, and AVE values range from 0.505 to 0.635, exceeding
acceptable values of higher than 0.5 (Liu and Lee, 2015). Based on the above statistics for the
proposed model, the measurement scale of study 1 presents discriminant validity (Fornell and
Larcker, 1981).

3.3 Cross-validation examinations

To measure the model cross-validation, this study followed the suggestion made by Massaro
et al. (2015) and considered the average entrepreneurial orientation (EO) as split into two
groups provided by Taiwanese and Chinese cultural and creative firms. The first group,
called the “entrepreneurs”, contains 429 firms and values of EO provided by whole cultural
and creative firms that are higher than the averages of the sample. The second group, called
the “innovators”, contains 357 firms and values of EO provided by whole cultural and
creative firms that are lower than the averages of the sample. The SEM is used to test both
groups’ cross-validation. The results shown in Table 3 are similar within the two groups,
which confirmed the cross validation of this study.

4. Findings
Table 4 shows foundational descriptive statistics and correlations for the constructs
measured in this study. As some of the measurement items present strong correlations, the
variance inflation factor (VIF) was estimated to eliminate concerns of multicollinearity. The
VIF results are shown in the final column, and values range from 1.83 to 3.6, suggesting that
multicollinearity is not an issue for this study.

4.1 Measurement model

This study used structural equation modelling (SEM) to test the proposed model. Bergh et al.
(2016) asserted that SEM allows researchers to modify not only the initial proposed model to
pursue the best model fit but also the explanatory theorized model compared to one or more
competing models. Thus, SEM provides another means of studying the possibility of new
paths by testing the proposed model and comparing it to alternative models to evaluate and
confirm the initial proposed model (Hair et al., 2019). Additionally, SEM estimates
unobservable and constructed coefficients, which may reflect a more complete and less
blatant explanation of the true phenomena that is representative of social interactions and
MD Factor
Constructs and factors Mean S.D. loading t-value CR1 AVE2

Innovation Covin and Slevin (1989) 0.864 0.559

1. Our company stresses the technological 4.934 1.394 0.749 21.807***
innovation of products or services
2. We have developed many new products or 5.009 1.310 0.762 22.237***
services over the past 5 years
3. Most changes made to our new products or 4.795 1.355 0.694 19.924***
services have been substantial
4. We prefer to use unique and new processes or 4.854 1.361 0.754 21.958***
methods
5. We prefer to use experimental and original 4.831 1.389 0.778 20.453***
methods to solve problems
Proactiveness Covin and Slevin (1989) 0.820 0.602
6. When facing competition, we usually take 4.803 1.370 0.766 22.017***
action before our competitors
7. We always create new products, services, 4.807 1.428 0.782 22.558***
management models or operational technologies
8. We tend to be a “leader” in developing new 4.889 1.407 0.780 19.126***
products and new ways of thinking
Risk Taking Covin and Slevin (1989) 0.805 0.579
9. We tend to adopt a “high risk, high reward” 4.556 1.431 0.739 19.563***
investment plan
10. Based on external factors, we tend to adopt 4.654 1.414 0.789 20.768***
“wide-ranging” approaches to company goals
11. When faced with uncertainty, we adopt a 4.772 1.361 0.753 21.662***
positive attitude to maximize the likelihood of
identifying potential opportunities
Social Capital Subramaniam and Youndt (2005)
1. Our employees work together and can diagnose 5.204 1.275 0.804 22.132*** 0.839 0.635
and solve problems
2. Our employees share information and learn 5.140 1.363 0.830 25.142***
from one another
3. Our employees interact with others from 5.089 1.301 0.754 22.385***
different departments of the company
Human capital Subramaniam and Youndt (2005) 0.838 0.510
1. Our employees are well trained 5.056 1.303 0.769 22.172***
2. Our employees are generally considered to be 4.989 1.340 0.717 20.455***
the best in this industry
3. Our employees are smart and creative 5.080 1.335 0.759 19.565***
4. Our employees are experts in their respective 5.005 1.230 0.577 16.122***
fields
5. Our employees are learning and developing 5.107 1.340 0.732 20.961***
new ideas and knowledge
Organizational capital Subramaniam and Youndt 0.803 0.505
(2005)
1. Our organization preserves special secrets to 5.094 1.211 0.700 18.299***
save knowledge
Table 2. 2. Organizational knowledge is mostly stored and 4.991 1.201 0.749 19.540***
Descriptive statistics written down in manuals or databases
and confirmatory
factor analysis (continued )
 Factor
Creating firm’s
Constructs and factors Mean S.D. loading t-value 1
CR AVE 2 competitive
***
advantage
3. Our organizational culture adopts valuable 5.020 1.239 0.717 19.223
ideas and ways to solve questions
4. Our organization’s knowledge and information 4.935 1.245 0.674 17.648***
are embedded in structures, systems and
processes

Factor
Constructs and factors Mean S.D. loading t-value CR AVE

Competitive advantage Wu and Chen (2012) 0.794 0.564

1. Our products offers unique benefits over those 5.045 1.244 0.763 19.022***
of our competitors
2. Our products offer better quality experiences 5.167 1.253 0.796 19.717***
than those of our competitors
3. Our products are more advanced than those of 4.961 1.345 0.689 17.826***
our competitors
Political ties Li and Zhang (2007) 0.789 0.556
1. We expend considerable effort in building 4.669 1.332 0.680 17.685***
personal networks with local governments
2. We invest in substantial resources to maintain 4.925 1.268 0.790 20.119***
good relations with local authorities
3. We invest considerable resources to build 4.967 1.309 0.763 19.228***
relationships with high-level government officials
Business ties Peng and Luo (2000) 0.771 0.537
1. We maintain positive relationships with 5.356 1.373 0.808 14.863***
customers
2. We maintain positive relationships with major 5.148 1.321 0.817 14.932***
suppliers
3. We maintain positive relationships with our 4.875 1.274 0.539 15.446***
competitors
Note(s): N 5 786. *p < 0.05; **p < 0.01; ***p < 0.001; CR1 Composite reliability; AVE2 Average variance extract
Note(s): N 5 786. *p < 0.05; **p < 0.01; ***p < 0.001 Table 2.

artefacts (Westland, 2019). Therefore, this study used SEM to examine the proposed
mediation–moderation models.
In testing Hypotheses 1 and 2, the measurement framework used includes six latent
constructs (e.g. the first order of Intellectual capital covers human, social and organizational
capital and the second order of Entrepreneurial orientation covers sub-dimensions
innovation, risking taking and proactiveness) related to the examination of hypotheses for
all samples. The values for the proposed model are shown in Figure 2, and all indicator factors
load on respective variables significantly at the 0.001 level with model fit values of
χ 2 5 834.616, p < 0.001; χ 2/df 5 3.743; CFI 5 0.938; IFI 5 0.938; TLI 5 0.930; NFI 5 0.918;
RFI 5 0.907; AGFI 5 0.891; and RMSEA 5 0.059. Further, in confirming the best model fit of
the proposed model, the second-order model of entrepreneurial orientation is transformed
into a first-order model presented as the alternative model given in Figure 3a. The model fit
values are as follows: χ 2 5 2077.571, p < 0.001; χ 2/df 5 9.358; CFI 5 0.812; IFI 5 0.813;
TLI 5 0.786; NFI 5 0.795; RFI 5 0.766; AGFI 5 0.790; and RMSEA 5 0.103. Another
alternative model shown in Figure 3b demonstrates the integrated fit of the first model of
intellectual capital with the second order. The model fit results are as follows: χ 2 5 1904.708,
MD Entrepreneur firms Innovator firms
Model Coefficient t-value p-value Coefficient t-value p-value

Direct effects
EO → Human capital(HC) 0.455 6.038 *** 0.826 10.588 ***
EO → Social capital(SC) 0.528 5.237 *** 0.909 10.357 ***
HC → Organization capital(OC) 0.302 3.764 *** 0.995 5.411 ***
SC → Organization capital(OC) 0.306 3.387 *** 0.274 5.749 ***
Indirect effects
EO → HC → OC 0.137 4.901 *** 0.822 7.999 ***
EO → SC → OC 0.162 4.312 *** 0.249 8.053 ***
Goodness of fit indices
χ 2(df) 446.117(202) 402.319(203)
CFI 0.868 0.938
Table 3.
Reexamine the cross- GFI 0.906 0.906
validation of proposed IFI 0.870 0.939
model for entrepreneur RESEA 0.059 0.053
and innovator firms Note(s): *p < 0.10; **p < 0.05; ***p < 0.01

p < 0.001; χ 2/df 5 8.503; CFI 5 0.830; IFI 5 0.830; TLI 5 0.808; NFI 5 0.812; RFI 5 0.788;
AGFI 5 0.800; and RMSEA 5 0.098. These values present a worse model fit than the original
model. These results suggest that a further investigation of the proposed hypothesized model
is warranted.
Hypothesis 1 proposes the mediating role of human capital, and Hypothesis 2 proposes the
mediating roles of social capital in linking the relationships between entrepreneurial
orientation and organizational capital. Consistent with these predictions, the mediating roles
of human (e.g. indirect effect: β 5 0.544; p < 0.001) and social capital (e.g. indirect effect:
β 5 0.151; p < 0.001) link the relationships between EO and organizational capital. Further,
Zhang et al. (2019) asserted that when testing mediation effects, the values of the bias-
corrected 95% confidence interval (CI) and percentile, 95% CI should not include 0. Table 5
shows the CI results and proves that the values fit the proposed direction. Thus, Hypotheses 1
and 2 are supported.
This study next examines how intellectual capital may create a competitive advantage as
proposed by Hypotheses 3a and 3b. The results of the proposed model shown in Figure 4
show that χ 2 5 1,142.781, p < 0.001; χ 2/df 5 3.931; CFI 5 0.926; IFI 5 0.926; TLI 5 0.917;
NFI 5 0.903; RFI 5 0.892; AGFI 5 0.873; and RMSEA 5 0.061. The results thus achieve an
acceptable level of model fit. Hypotheses 3a and 3b suggest that organizational capital
mediates the relationship between human and social capital and competitive advantage.
Through a similar examination, the mediating role of organizational capital (e.g. H3a indirect
effect: β 5 0.731; p < 0.001; H3b indirect effect: β 5 0.192; p < 0.01) that links the relationship
among human, social and competitive advantage is confirmed. We also used the above
procedure to test CI as shown in Table 6. The results do not include 0, showing that
Hypotheses 3a and 3b are supported.
Finally, to address Hypotheses 4 and 5, we separate the sample into Taiwanese and
Chinese samples and identify differences between Taiwan and China and to show how
different network ties influence cultural and creative organizations’ competitive advantage.
For the Taiwanese sample, the results show the best degree of model fit in Figure 5:
χ 2 5 939.237, p < 0.001; χ 2/df 5 3.228; CFI 5 0.913; IFI 5 0.914; TLI 5 0.903; NFI 5 0.880;
RFI 5 0.866; AGFI 5 0.823; and RMSEA 5 0.073. Further, two alternative models are
proposed to confirm the best models of this study. Figure 6a separates the second order of EO
Variables Mean S.D. 1 2 3 4 5 6 7 8 9 VIF

Entrepreneurial orientation
1. Innovation 4.884 1.096 0.864
2. Proactiveness 4.833 1.201 0.766 0.819 3.60
3. Risk taking 4.661 1.188 0.690 0.674 0.803 2.83
4. Social capital 5.144 1.141 0.607 0.623 0.457 0.837 2.71
5. Human capital 5.047 1.020 0.635 0.631 0.501 0.739 0.837 2.69
6. Organization capital 5.010 0.969 0.510 0.498 0.374 0.603 0.684 0.801 2.61
7. Competitive advantage 5.057 1.075 0.609 0.645 0.512 0.661 0.763 0.614 0.790 2.45
8. Political ties 4.854 1.093 0.493 0.462 0.392 0.491 0.518 0.637 0.497 0.789 1.89
9. Business ties 5.126 1.076 0.499 0.510 0.387 0.656 0.666 0.693 0.605 0.553 0.744 1.83
Note(s): The significance of Pearson’s correlation coefficient reaches ***p < 0.001. Internal consistency reliability is shown on the diagonal in bold, and numbers below the
diagonal represent construct correlations
advantage
competitive
Creating firm’s

Means, standard
Table 4.

and internal
consistency reliability
deviations, correlations
MD
Intellectual
Human
***
Capital
0.821*** Capital 0.671

H1 0.544***
Entrepreneurial Organization
orientation *** Capital
H2 0.151
0.802*** Social 0.191***
Capital
0.845***
0.820 ***
0.959***

Risk
Innovation Proactiveness
Taking
Figure 2.
Relationships between
IC and EO
Note(s): χ2 = 834.616, p < 0.001; χ2/df = 3.743; CFI = 0.938; IFI = 0.938; TLI = 0.930;
NFI = 0.918; RFI = 0.907; AGFI = 0.891; and RMSEA = 0.059

into the first order of innovation, risk taking and proactiveness (χ 2 5 1818.193, p < 0.001; χ 2/
df 5 6.270; CFI 5 0.796; IFI 5 0.797; TLI 5 0.771; NFI 5 0.767; RFI 5 0.739; AGFI 5 0.722;
and RMSEA 5 0.112), and Figure 6b integrates the first order of the sub-dimensions of
human capital, social capital and organizational capital into second-order IC (χ 2 5 170.688,
p < 0.001; χ 2/df 5 6.175; CFI 5 0.800; IFI 5 0.801; TLI 5 0.776; NFI 5 0.771; RFI 5 0.743;
AGFI 5 0.723; and RMSEA 5 0.111). The model values present the indexes that are worse
than those of the original models, thereby confirming that the model proposed here is
superior.
The results for Hypothesis 4 on the moderating effects of business ties on organizational
capital and competitive advantage are given in Figure 5 and Table 6. Table 7 shows that the
interaction term “Organizational capital * Business Ties → Competitive Advantage” is
positive and significant (β 5 0.241; p < 0.001). Further, the interaction effects of business ties
are illustrated in Figure 7, which shows that for cultural and creative managers who score
high on the importance of business ties, organizational capital is more positively related to
competitive advantages than it is for managers whose scores are slow on business ties. As
such, Hypothesis 4 is fully supported.
Alternatively, for the Chinese sample, the results show the best level of model fit:
χ 2 5 918.381, p < 0.001; χ 2/df 5 3.156; CFI 5 0.822; IFI 5 0.823; TLI 5 0.801; NFI 5 0.761;
RFI 5 0.733; AGFI 5 0.800; and RMSEA 5 0.077. Further, two alternative models are
proposed to confirm the best models examined in this study. Figure 9a separates the second-
order EO into first-order innovation, risking taking and proactiveness (χ 2 5 1,205.115,
p < 0.001; χ 2/df 5 4.156; CFI 5 0.740; IFI 5 0.743; TLI 5 0.709; NFI 5 0.686; RFI 5 0.649;
AGFI 5 0.749; and RMSEA 5 0.093), and Figure 9b integrates the first-order sub-dimensions
of human, social and organizational capital into second-order IC (χ 2 5 1,038.111, p < 0.001; χ 2/
df 5 3.555; CFI 5 0.788; IFI 5 0.790; TLI 5 0.764; NFI 5 0.730; RFI 5 0.699; AGFI 5 0.790;
and RMSEA 5 0.083). The model fit values present worse indexes than those of the original
models, confirming that the model presented here is superior. Furthermore, the results of
Hypothesis 5 on the moderating effects of political ties on organizational capital and
 Entrepreneurial Intellectual Creating firm’s
Orientation Capital competitive
advantage
0.494*** Human
Innovation 0.659***
Capital
0.470***
0.604***
Organization
Proactiveness Capital
0.626***

–0.122**
Risk- –0.195** Social 0.174***
Taking Capital

Alternative Model 1
(a)
Note(s): χ = 2077.571, p < 0.001; χ 2 /df = 9.358; CFI = 0.812;
2

IFI = 0.813; TLI = 0.786; NFI = 0.795; RFI = 0.766;

AGFI= 0.790; and RMSEA = 0.103

Entrepreneurial
Orientation
Human
Innovation Capital
0.523***
0.977***

0.499*** 0.784***
Proactiveness Intellectual Organization
Capital
Capital
0.885***
Risk- –0.018
Social
Taking
Capital

Alternative Model 2 Figure 3.

Alternative models of
(b) the proposed research
Note(s): χ 2 = 1904.708, p < 0.001; χ2/df = 8.503; CFI = 0.830; framework on the
relationship between
IFI = 0.830; TLI = 0.808; NFI = 0.812; RFI = 0.788; AGFI = 0.800; EO and IC
and RMSEA = 0.098

competitive advantage are summarized in Figure 8 and Table 8. Table 8 shows that the
interaction term “Organizational capital * Political Ties → Competitive Advantage” is
positive and significant (β 5 0.820; p < 0.001).
The nature of interaction effects on business ties is illustrated in Figure 10, which shows
that for cultural and creative managers in China who score high on the importance of
political ties, organizational capital is more positively related to competitive advantage
than it is for managers who score low on political ties. As such, Hypothesis 5 is fully
supported.
MD 5. Discussion and implications
Following the increasing attention being paid to Taiwan and China, many management studies
have sought to identify the generalities (or differences) between the business behaviours
preferred in Taiwan and China (Chen et al., 2019; Liu et al., 2020). Extending the previous studies,
this paper explores the strong and complementary relationships between cultural and creative
industries and international trends of global competition to demonstrate the differences
observed between Taiwan and China. The development of cultural and creative industries must
follow customers’ needs and survive in a dynamic industrial environment. As Liu et al. (2020)
discussed, the mutual relationships among variables have proved to be meaningful in the
business literature as well as helpful in terms of the quality of decision-making in practice. The
results of this study showing that a cultural and creative firm’s approach to developing
intellectual capital (IC) depends on its entrepreneurial orientation (EO) (i.e. its unique
combination of the critical attributes of innovation, risk taking and proactiveness) not only
confirmed the critical attributes of IC and EQ emphasized by the previous studies (Alzuod et al.,
2017; Talebi et al., 2015) but they also indicate that different components of IC play a distinct role
in shaping the IC accumulation process. Fel
ıcio et al. (2014) highlighted the importance of human
capital, social capital and organizational performance. This study shows that human capital and
social capital are individually linked to organizational capital such that close internal alignment
among the three components of IC tends to be oriented towards competitive advantage. While

Bias-corrected Percentile 95%

Standard 95% CI CI
Hypothesis path error Estimates Lower Upper Lower Upper Results
**
H1: Entrepreneurial 0.062 0.544 0.427 0.672 0.427 0.672 Support
orientation → human
capital → organization capital
H2: Entrepreneurial 0.048 0.151** 0.057 0.249 0.059 0.251 Support
Table 5. orientation → social
Mediation effect test capital → organization capital
(Study 1) Note(s): N 5 786. *p < 0.05; **p < 0.01; ***p < 0.001

0.608 ** Intellectual
Capital
Innovation Human
Capital
0.943***
0.824*** 0.789***

0.731**
0.961*** 0.927*** Competitive
Proactiveness Entrepreneurial Organization
Orientation Capital Advantage

0.192 **
0.820***
0.804 *** 0.156 ** 0.208 ***

Social
Risk Taking
Capital

Figure 4.
Research model results
(Full sample) Note(s): χ = 1142.781, p < 0.001; χ/df = 3.931; CFI = 0.926; IFI = 0.926; TLI = 0.917; NFI = 0.903;
RFI = 0.892; AGFI = 0.873; and RMSEA = 0.061
 Bias-corrected Percentile
Creating firm’s
Standard 95% CI 95% CI competitive
Hypothesis path error Estimates Lower Upper Lower Upper Results advantage
**
H1: Entrepreneurial 0.058 0.608 0.501 0.731 0.507 0.733 Support
orientation → human
capital → organization capital
H2: Entrepreneurial 0.038 0.156** 0.088 0.237 0.087 0.234 Support
orientation → social
capital → organization capital
H3a: Human 0.044 0.731** 0.639 0.816 0.639 0.816 Support
capital → Organization
capital → competitive advantage
H3b: Social 0.044 0.192** 0.102 0.208 0.104 0.281 Support
capital → organization Table 6.
capital → competitive advantage Mediation effect test
Note(s): N 5 786.*p < 0.05; **p < 0.01; ***p < 0.001 (study 2-full sample)

0.631 ** Intellectual
Capital
Innovation Human
Capital Business
Ties
0.931*** ***
*** 0.961
0.841

0.892 ** 0.241***
***
0.939 Competitive
Entrepreneurial Organization
Proactiveness Advantage
Orientation Capital 0.928***

0.044
0.971***
0.833*** 0.047
Social
Risk Taking
Capital
Figure 5.
0.031
Research model results
for Study 2-Taiwanese
Note(s): χ = 939.237, p < 0.001; χ/df = 3.228; CFI = 0.913; IFI = 0.914; TLI = 0.903; NFI = 0.880; sample
RFI = 0.866; AGFI = 0.823; and RMSEA = 0.073

firms tend to use managerial ties to create a competitive advantage, their performance varies due
to cultural differences and political systems (Zhao and Timothy, 2015). This study explores
differences in the cultural backgrounds and political systems of cultural and creative firms by
identifying the different moderating roles of business and political ties in cultural tourism
development in Taiwan and China.

5.1 Theoretical and managerial implications

Our results on process orientation towards cultural and creative firms’ competitive
advantages suggest that tourism and management professionals may need to pay more
attention to the mediating and moderating effects of firms’ competitive advantage predictors
rather than focussing on only mediation or moderation effects (Scarpi et al., 2019). Regarding
the different effects of managerial ties, this study statistically analyses mediation–
moderation effects to gain a full understanding of the competitive advantage creation
process, which may inform existing tourism and hospitality studies (Liu, 2017, 2018).
MD Entrepreneurial Intellectual
Orientation 0.046 Capital
*** ***
0.237 0.327 Business
0.487*** Human Ties
***
Innovation 0.957
Capital
*** ***
0.487 0.858 ***
0.241
*
0.086
Organization Competitive
Proactiveness Capital Advantage
***
0.165*** 0.897
0.005
0.014 0.017 0.052
0.565 ***
Risk- Social 0.058
Taking 0.487
*** Capital

Alternative Model 1
(a)
Note(s): χ = 1818.193, p < 0.001; χ/df = 6.270; CFI = 0.796; IFI = 0.797; TLI = 0.771;
NFI = 0.767; RFI = 0.739; AGFI = 0.722; and RMSEA = 0.112

Entrepreneurial
Orientation Human Organization Social
Capital Capital Capital

Innovation *** *** ***

0.558 0.987 *** 0.751
0.849

***
0.151
*** 0.896 Competitive
Proactiveness Intellectual Advantage
Capital ***
0.361
0.495 ** *
0.450 **
0.137
0.495***
Risk-
Taking Business
Figure 6. Ties
Alternative models for
the proposed research
framework on the Alternative Model 2
moderating roles of
business ties between (b)
IC and competitive
advantages
Note(s): χ =170.688, p < 0.001; χ/df = 6.175; CFI = 0.800; IFI = 0.801; TLI = 0.776;
NFI = 0.771; RFI = 0.743; AGFI = 0.723; and RMSEA = 0.111

Standardized path Standard

Hypothesis path coefficients error Results

Organization capital → competitive advantage 0.517 ***

0.071 Support
Business ties → competitive advantage 0.330*** 0.055
Table 7. Organization capital * business ties → competitive 0.241*** 0.006
Moderating effect test advantage
(Study 2-Taiwan) Note(s): *p < 0.05; **p < 0.01; ***p < 0.001
 6 Creating firm’s
5.5 competitive
5 Low Business advantage
Competitive Advantage

4.5 Ties
4
High Business
3.5 Ties
3
2.5 Figure 7.
Interactions between
2 organizational capital
1.5 and business ties and
effects on competitive
1 advantages–Taiwan
Low Organization Capital High Organization Capital

0.312 ** Intellectual
Capital
Innovation Human
Political
Capital
Ties
0.957***
0.691*** 0.479***
0.376 ** 0.820***
***
0.992 Organization Competitive
Proactiveness Entrepreneurial
Orientation Capital 0.784*** Advantage

0.329 **
0.693***
0.658*** 0.420***
Social
Risk Taking
Capital

0.260** Figure 8.
Research model results
for Study 2-Chinese
Note(s): χ = 918.381, p < 0.001; χ/df = 3.156; CFI = 0.822; IFI = 0.823; TLI = 0.801; NFI = 0.761; sample
RFI = 0.733; AGFI = 0.800; and RMSEA = 0.077

Furthermore, as distinct and intangible organizational properties, accumulation and

competency development, EO and IC are critical antecedent attributes leading to exposure
to dynamic environmental exigencies (Pedro et al., 2018). According to our empirical results,
cultural and creative managers should build a learning mechanism to encourage and develop
EO and IC capabilities and to provide means of understanding of customers’ changing
expectations (Assimakopoulos et al., 2015). Hence, in enhancing EO and IC, cultural and
creative firms can develop a competitive advantage over competitors. Our findings also offer
new insight to support further studies of the benefits of managerial ties for firms operating in
Guanxi cultural settings in Chinese contexts. This study uses an empirical approach to
facilitate the conceptualization of the existing tourism and management research on
managerial ties in Guanxi society (Chang and Liu, 2009; Li et al., 2018). Our study shows that
the interactive effects observed between organizational capital–business/political ties and the
competitive advantages and mediation effects of EO and IC on competitive advantage may
act as an illustrative theoretical framework for the “Guanxi” research.
The findings of study 2 show that the asset variance of managerial ties drives adaptability
in support of competitive advantage creation in the different cultural and political systems of
MD Entrepreneurial Intellectual
Orientation 0.239 Capital
0.035 – 0.039**
Political
0.145*** Human Ties
Innovation 0.246
Capital
*** ***
0.229 0.196 ***
0.820
***
0.907
Organization Competitive
Proactiveness Capital Advantage
***
0.872
*** 0.796
0.536
**** 0.138 –0.159 ***
0.457
– 0.205
Social ***
Risk- 0.573
Taking – 0.335
*** Capital

Alternative Model 1
(a)
Note(s): χ = 1205.115, p < 0.001; χ/df = 4.156; CFI = 0.740; IFI = 0.743; TLI = 0.709;
NFI = 0.686; RFI = 0.649; AGFI = 0.749; and RMSEA = 0.093
Entrepreneurial
Orientation Human Organization Social
Capital Capital Capital

Innovation *** *** ***

0.424 0.948 *** 0.945
0.639

***
0.507
*** 0.878 Competitive
Proactiveness Intellectual Advantage
Capital ***
0.329
0.372** **
–0.133 *
** 0.446
–0.151
Risk-
Taking Political
Figure 9. Ties
Alternative models for
the proposed research
framework on the Alternative Model 2
moderating roles of
business ties and IC in (b)
competitive
advantages
Note(s): χ = 1038.111, p < 0.001; χ/df = 3.555; CFI = 0.788; IFI = 0.790; TLI = 0.764;
NFI = 0.730; RFI = 0.699; AGFI = 0.790; and RMSEA = 0.083

Taiwan and China, suggesting that managers wishing to maintain a competitive advantage
should also consider cultural and political differences when developing competitive
marketing strategies to ensure superior performance (Wang and Zhang, 2017). Our results
show that business ties enhance a firm’s competitive advantage when perceived
organizational capital is higher in Taiwan. Furthermore, the similar mechanisms of
political ties may strengthen the effects of organizational capital on competitive advantages
in China. These findings suggest that cultural and creative firms must be careful when
evaluating managers’ external ties under different cultural contexts to acquire rare market
resources and to cultivate capabilities and competitive advantages. Investments in political
and business ties can help cultural and creative firms improve their market status as
commitments to these managerial ties may facilitate access to valuable resources and Creating firm’s
improve decision quality, which is critical to business operations in Chinese contexts (Chang competitive
and Liu, 2009). Our empirical results offer explanations for the positive effects of business and
political ties on EO-IC and competitive advantages, thus contributing to the literatures in four
advantage
respects, with implications for second-order factor analyses (Liu, 2017, 2018), the mutual
relationships between variables that combine sub-dimensions (Liu and Lee, 2015; Tsai and
Ghoshal, 1998), mediation-moderation settings (Ribeiro et al., 2018) and comparative studies
of the Chinese context (Jiang et al., 2018).

5.2 Limitations and future research

Despite this study’s contributions, several limitations must be addressed in future tourism
and management research. First, this work uses an empirical design and survey to examine
the proposed hypothesis, limiting the understanding of the causal effects of the verified
relationships between constructs. Future research must use survey and interview data to
investigate the causal effects of the constructed relationships for specific participants in
response to cultural and creative industries (Chang and Liu, 2009). Second, while this study is
the first to combine methods of mediation and moderation and to use a first-second-order
model to test patterns shaping cultural and creative firms operating in Taiwan and China, it
does not analyse employee behaviour and how it influences EO and IC accumulation in
organizations. Therefore, future tourism and management research may consider the
opinions of managers and employees and use multi-level settings to investigate the
accumulation of EO or IC (Zgheib, 2018). Third, this study focuses on how cultural and
creative firms’ external network ties shape competitive advantages. Therefore, it does not
consider the trade-offs involved for business or political ties (Strobl and Kronenberg, 2016) or

Standardized path Standard

Hypothesis path coefficients error Results

Organization capital → competitive advantage 0.218***

0.086 Support
Political ties → competitive advantage 0.527*** 0.090
Organization capital * political ties → competitive 0.820*** 0.016 Table 8.
advantage Moderating effect test
Note(s): *p < 0.05; **p < 0.01; ***p < 0.001 (study 2-China)

6
5.5
5
Competitive Advantage

4.5
4
3.5 Low Political
Ties
3
2.5 High Political Figure 10.
Interactions between
2 Ties
organizational capital
1.5 and political ties and
competitive
1 advantages—China
Low Organization Capital High Organization Capital
MD the push–pull factors that motivate managers to engage in business management (Dean and
Suhartanto, 2019). Future research might explore trade-offs or push-pull–factors if such
attributes affect managers’ behaviours and firms’ competitive advantages.

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About the author

Chih-Hsing (Sam) Liu is an associate professor of National Kaohsiung University of
Science and Technology. His current research interests are in the area of tourism
management, creativity, knowledge management and social network. His papers have
been published in the Tourism Management, International Journal of Hospitality
Management, Journal of Sustainable Tourism, Journal of Hospitality and Tourism
Research and others. Chih-Hsing (Sam) Liu can be contacted at: phd20110909@
gmail.com.

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