Innovation Environment Matters More Than Policy? Evidence on Technology Adoption From Chinese Manufacturers

ABSTRACT

This study examines how policy regulation and external innovation environment jointly influence manufacturing firms' adoption of emerging technologies and subsequent operational performance. Drawing on institutional theory and the resource‐based view, we analyse survey data from 451 Chinese manufacturing firms using structural equation modelling. The results show that policy regulation does not directly drive technology adoption. Instead, it significantly shapes the external innovation environment, which fully mediates the relationship between policy regulation and technology adoption. Emerging technology adoption further improves operational performance. These findings reveal an institution‐resource conversion mechanism: Policy enables the environment, and the environment drives technology adoption. The study extends institutional theory by moving beyond the linear pressure‐response framework and theorising the external innovation environment as a conversion interface between institutional and resource logics. For practice, firms should embed technology adoption into long‐term capability building, while policymakers should shift from direct intervention to cultivating an innovation environment that supports resource coordination.