A Conceptual Framework for SME Growth in China Based onStrategic Resources, Capabilities, and Sustainability
About this article
Keywords:
SMEs; Innovation Incubation; Resource-Based View; Incubation Model; Sustainable Development; China; VRIN FrameworkAbstract
The sustainable growth of Small and Medium-sized Enterprises (SMEs) is central to economic resilience and inclusive development. In China, government-led initiatives have spurred the expansion of business incubation institutions to support entrepreneurship and innovation. However, existing studies have not sufficiently examined how resource-based mechanisms within incubation models affect SME development. This conceptual paper proposes an integrated framework grounded in the Resource-Based View (RBV), Dynamic Capabilities Theory, and the Natural Resource-Based View (NRBV) to explore the relationship between incubation services, resource orchestration, and SME performance. The study identifies key internal and external resources, such as financial, human, technical, and sustainability-oriented capabilities, that influence incubator effectiveness. It highlights the importance of strategic resource alignment, capability development, and environmental adaptation in supporting SME competitiveness. The framework also considers contextual factors such as regional disparities and sector-specific needs, which may moderate the effectiveness of incubation efforts. By situating the discussion within China’s evolving innovation ecosystem, particularly in regions like Fujian Province, the study contributes to theory-building in incubation research and informs the design of more effective and context-responsive incubation strategies. The framework serves as a foundation for future empirical research aimed at enhancing the long-term impact of incubation models on SME innovation, sustainability practices, and strategic growth.
References
Assenova, V. A. (2020). Early-stage venture incubation and mentoring promote learning, scaling, and profitability among disadvantaged entrepre-neurs. Organization Science, 31(6), 1560–1578. https://doi.org/10.1287/orsc.2020.1367.
Ayatse, F. A., Kwahar, N., & Iyortsuun, S. A. (2017). Business incubation process and firm performance: An empirical review. Journal of Global Entrepreneurship Research, 7(1), 2. https://doi.org/10.1186/s40497-016-0059-6.
Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120. https://doi.org/10.1177/014920639101700108.
Belloum, Y., & Khemili, F. (2024, June). Sustainability-oriented incubators: An overview. Journal of Administrative and Financial Sciences, 8(1), 34–46. https://doi.org/10.37644/1939-008-001-002.
Bergek, A., & Norrman, C. (2008). Incubator best practice: A framework. Technovation, 28(1–2), 20–28. https://doi.org/10.1016/j.technovation.2007.07.008.
View more references (40)
Bonfanti, A., Mion, G., Vigolo, V., & De Crescenzo, V. (2025). Business incubators as a driver of sustainable entrepreneurship development: Evi-dence from the Italian experience. International Journal of Entrepreneurial Behavior & Research, 31(6), 1430–1454. https://doi.org/10.1108/IJEBR-05-2024-0500.
Borch, O. J., & Madsen, E. L. (2007). Dynamic capabilities facilitating innovative strategies in SMEs. International Journal of Technoentrepreneur-ship, 1(1), 109–125. https://doi.org/10.1504/IJTE.2007.014731.
Breu, F., & Kanbach, D. K. (2025). Strategy and business model development for business incubators: A systematic literature review and frame-work. Journal of Technology Transfer, 1–32. https://doi.org/10.1007/s10961-025-10253-3.
Bruneel, J., Ratinho, T., Clarysse, B., & Groen, A. (2012). The evolution of business incubators: Comparing demand and supply of business incuba-tion services across different incubator generations. Technovation, 32(2), 110–121. https://doi.org/10.1016/j.technovation.2011.11.003.
China Daily. (2025, July 1). SMEs play key role in boosting nation's innovation, employment. https://epaper.chinadaily.com.cn/a/202507/01/WS68634473a31072f9198f3962.html.
Duan, J., & Xia, S. (2022). The relationship between innovative performance and environmental regulations: Evidences from Jiangsu Province, Chi-na. Frontiers in Environmental Science, 10, Article 955703. https://doi.org/10.3389/fenvs.2022.955703.
Edoun, E., Phumuza, E. L., & Pradhan, A. (2022, December). Dynamic capability from product development services in incubated SMEs: A tech-nology management perspective. In 1st Australian International Conference on Industrial Engineering and Operations Management. https://doi.org/10.46254/AU01.20220123.
Fujian Provincial Bureau of Statistics. (2023). Statistical yearbook of Fujian. Retrieved from http://tjj.fujian.gov.cn.
Eveleens, C. P., van Rijnsoever, F. J., & Niesten, E. M. M. I. (2017). How network-based incubation helps start-up performance: A systematic re-view against the background of management theories. Journal of Technology Transfer, 42, 676–713. https://doi.org/10.1007/s10961-016-9510-7.
Gao, Y., & Hu, Y. (2017). The upgrade to hybrid incubators in China: A case study of Tuspark Incubator. Journal of Science and Technology Poli-cy Management, 8(3), 331–351. https://doi.org/10.1108/JSTPM-05-2017-0021.
Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2019). Multivariate data analysis (8th ed.). Cengage Learning.
Hart, S. L. (1995). A natural-resource-based view of the firm. Academy of Management Review, 20(4), 986–1014. https://doi.org/10.5465/amr.1995.9512280033.
Hong, J., & Lu, J. (2016). Assessing the effectiveness of business incubators in fostering SMEs: Evidence from China. International Journal of En-trepreneurship and Innovation Management, 20(1–2), 45–60. https://doi.org/10.1504/IJEIM.2016.075298.
Hu, Y., & Dumay, J. (2023). The impact of intangible resources on SMEs’ innovation performance: Evidence from China. Technological Forecast-ing and Social Change, 192, 122280.
Huang, R., & Ichikohji, T. (2024). How dynamic capabilities enable Chinese SMEs to survive and thrive during COVID-19: Exploring the mediat-ing role of business model innovation. PLOS ONE, 19(2), e0304471. https://doi.org/10.1371/journal.pone.0304471.
ICSIN. (2020, August 13). Incubation systems for start-ups in China and India: A comparison of the two ecosystems. Indian Council for Social In-novation. https://icsin.org/blogs/2020/08/13/incubation-systems-for-start-ups-in-china-and-india-a-comparison-of-the-two-ecosystems/.
Kennett, G., Hu, L., Maritz, A., & Sun, H. (2020). Learning huddles: Absorptive capacity and sustainable growth of Chinese incubatees. Journal of Industry–University Collaboration, 2(3), 141–159. https://doi.org/10.1108/JIUC-08-2020-0007.
Latip, M., Sharkawi, I., & Mohamed, Z. A. (2025). Enhancing sustainability practices in Malaysian food manufacturing SMEs: The mediating ef-fect of innovation capability. Corporate Social Responsibility and Environmental Management, 32(3), 4035–4052. https://doi.org/10.1002/csr.3170.
Ni, M., & Wang, M. (2025). Relationship network, knowledge transfer and open innovation behavior of SMEs from China. PLOS ONE, 20(6), e0326490. https://doi.org/10.1371/journal.pone.0326490.
Pattanasak, P., Anantana, T., Paphawasit, B., & Wudhikarn, R. (2022). Critical factors and performance measurement of business incubators: A sys-tematic literature review. Sustainability, 14(8), 4610. https://doi.org/10.3390/su14084610.
Rodrigues, M., & Franco, M. (2023). Green innovation in small and medium-sized enterprises (SMEs): A qualitative approach. Sustainability, 15(5), Article 4510. https://doi.org/10.3390/su15054510.
Sarstedt, M., Ringle, C. M., & Hair, J. F. (2020). Partial least squares structural equation modeling. In Homburg, C., Klarmann, M., & Vomberg, A. (Eds.), Handbook of market research (pp. 1–47). Springer. https://doi.org/10.1007/978-3-319-05542-8_15-2.
Sirmon, D. G., Hitt, M. A., & Ireland, R. D. (2007). Managing firm resources in dynamic environments to create value: Looking inside the black box. Academy of Management Review, 32(1), 273–292. https://doi.org/10.5465/amr.2007.23466005.
Sohu, J. M., Hongyun, T., Junejo, I., Akhtar, S., Ejaz, F., Dunay, A., & Hossain, M. B. (2024). Driving sustainable competitiveness: Unveiling the nexus of green intellectual capital and environmental regulations on greening SME performance. Frontiers in Environmental Science, 12, Article 1348994. https://doi.org/10.3389/fenvs.2024.1348994.
State Council of China. (2021). Outline of the 14th Five-Year Plan. Beijing: State Council.
Taghizadeh, S. K., Rahman, S. A., Nikbin, D., Radomska, M., & Maleki Far, S. (2024). Dynamic capabilities of the SMEs for sustainable innova-tion performance: Role of environmental turbulence. Journal of Organizational Effectiveness: People and Performance, 11(4), 767–787. https://doi.org/10.1108/JOEPP-04-2023-0166.
Tang, M., Walsh, G. S., Li, C., & Baskaran, A. (2019). Exploring technology business incubators and their business incubation models: Case studies from China. The Journal of Technology Transfer, 46(1), 90–116. https://doi.org/10.1007/s10961-019-09759-4.
van Rijnsoever, F. J., & Eveleens, C. P. (2021). Money don’t matter? How incubation experience affects start-up entrepreneurs’ resource valuation. Technovation, 106, Article 102294. https://doi.org/10.1016/j.technovation.2021.102294.
Wang, Z., He, Q., Xia, S., Sarpong, D., Xiong, A., & Maas, G. (2020). Capacities of business incubator and regional innovation performance. Tech-nological Forecasting and Social Change, 158, Article 120125. https://doi.org/10.1016/j.techfore.2020.120125.
World Bank. (2022). China’s economic outlook. Washington, DC: World Bank.
World Bank. (2017). SMEs and jobs: A global perspective on employment and growth. https://documents1.worldbank.org/curated/en/577091496733563036/pdf/115696-REVISED-PUBLIC-SMEs-and-Jobs-final.pdf.
World Bank. (2022). Small and medium enterprises (SMEs) finance. https://www.worldbank.org/en/topic/smefinance.
Wu, W., Wang, H., & Wu, Y. J. (2021). Internal and external networks, and incubatees’ performance in dynamic environments: Entrepreneurial learning’s mediating effect. Journal of Technology Transfer, 46(6), 1707–1733. https://doi.org/10.1007/s10961-020-09790-w.
Xiao, L., & North, D. (2017). The graduation performance of technology business incubators in China’s three tier cities: the role of incubator fund-ing, technical support, and entrepreneurial mentoring. Journal of Technology Transfer, 42, 615–634. https://doi.org/10.1007/s10961-016-9493-4.
Xiao, L., & North, D. (2018). The role of technological business incubators in supporting business innovation in China: A case of regional adaptabil-ity? Entrepreneurship & Regional Development, 30(1–2), 29–57. https://doi.org/10.1080/08985626.2017.1364789.
Xiamen Torch Development Zone. (2024). Annual report on innovation development. Retrieved from http://www.xmtorch.gov.cn.
Yuan, X., Hao, H., Guan, C., & Pentland, A. (2022). Which factors affect the performance of technology business incubators in China? An entre-preneurial ecosystem perspective. PLOS ONE, 17(1), e0261922. https://doi.org/10.1371/journal.pone.0261922.
Zhang, H. (2024). Three essays on Chinese SME innovation heterogeneity from a resource-based perspective [Doctoral dissertation, Freie Universi-tät Berlin].
Zhang, X. M., Xiao, Y., & Wu, P. J. (2021). Research status and development of business incubator in China. Open Access Library Journal, 8, e8283. https://doi.org/10.4236/oalib.1108283.
Zhao, K., Wu, W., & Ye, J. (2023). The impact of “Mass Entrepreneurship and Innovation” policy on SMEs’ innovation: Using quasi-natural exper-iments. Bulletin of Economic Research, 75(2), 348–365. https://doi.org/10.1111/boer.12359.