Through two in-depth case studies, we compare the approaches of a state-owned enterprise (SOE), Beijing Automotive Industries Holding Co., and a privately owned enterprise (POE), Geely, to acquire and absorb advanced technological knowledge to enhance their innovation capabilities. Each company acquired advanced knowledge from troubled famous Swedish automakers and upgraded their products technologically. Analyzing data mainly collected from secondary sources identifies major differences in approaches and actions at each acquisition step rooted in the type of ownership. We juxtapose these differences with insights from the literature on knowledge acquisition and research on firm ownership. Our findings show that the POE seeks the strategic goal of synergistic technology integration for better innovation and economic performance. In contrast, the SOE pursues national objectives with less regard for market success. This SOE focuses on an independent approach to knowledge absorption and development during their acquisition, whereas the POE emphasizes collaboration in innovation capacity development. This study provides insights into Chinese firms’ positioning on innovation development on the global stage, comparative capitalism, and the particular case of state capitalism in China.

We examine the mechanisms through which firm capabilities moderate the impact of institutional forces upon firms’ adoption of environmental management strategy (EMS). Viewing the limitations of the institutional perspective in explaining the heterogeneity in firms’ EMS, we suggest that an important source of variation is the idiosyncratic capabilities of the firm in acquiring and allocating resources. Based on the strategic response theme of institutional theory and the resource-based view, we argue that the influence of institutional forces on EMS is contingent on the presence of environmental orientation and innovation capability. Using data collected from China, we test these notions. Our empirical results suggest that both environmental orientation and innovation capability positively moderate the effect of institutional forces on firm's EMS. By demonstrating how institutional forces and firm capabilities interact with each other, we enhance our understanding of how firms succeed in developing EMS.