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Open AccessArticle

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

by Yu-Chun Chen 1,* and Min-Nan Chen 2,*
1
Department of Business Administration, National Formosa University, Yunlin 63201, Taiwan
2
Department of BioBusiness Management, National Chiayi University, Chiayi 60054, Taiwan
*
Authors to whom correspondence should be addressed.
Sustainability 2020, 12(3), 775; https://doi.org/10.3390/su12030775
Received: 27 December 2019 / Revised: 17 January 2020 / Accepted: 20 January 2020 / Published: 21 January 2020
(This article belongs to the Special Issue Sustainability in 2nd IT Revolution with Dynamic Open Innovation)
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. View Full-Text
Keywords: open innovation; informal economy; Shenzhen mobile phone industry; social trust open innovation; informal economy; Shenzhen mobile phone industry; social trust
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Chen, Y.-C.; Chen, M.-N. Social Trust and Open Innovation in an Informal Economy: The Emergence of Shenzhen Mobile Phone Industry. Sustainability 2020, 12, 775.

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