In China's dynamic and competitive business environment, characterized by rapid technological change and intense competition, the survival and sustainable growth of firms are major concerns. The average lifespan of Chinese enterprises is short, highlighting the need for strategies to ensure long-term success. This study focuses on the interplay between internal research and development (R&D) efforts and external collaboration as key drivers of firm growth. While existing research has examined these factors independently or explored their interaction effects, there's a gap in understanding the indirect impact of different types of external collaboration on firm growth capability via R&D efforts. This study aims to fill this gap by examining the mediating role of R&D intensity and R&D human capital in the relationship between three types of external collaboration (vertical, horizontal, and competitor) and firm growth capability. The study uses a sample of top-ranking innovative enterprises in China to provide insights relevant to emerging economies.

The literature review examines three streams of research: those treating R&D and external collaboration as parallel impacts on firm growth; those studying the moderation of external collaboration on the R&D-firm growth relationship; and those examining external collaboration's impact on firm growth with R&D as a moderator. The review highlights gaps: the lack of investigation into heterogeneous effects of different external collaboration types; the focus on firm performance rather than the multidimensional construct of firm growth capability; insufficient attention to the outside-to-inside impact path from collaboration to R&D efforts; and limited research in emerging economies. The study defines external collaboration as encompassing vertical (with suppliers and customers), horizontal (with various stakeholders like governments and universities), and competitor collaboration. R&D efforts are categorized into R&D intensity (investment) and R&D human capital (skilled personnel). Firm growth capability is analyzed from both financial (debt-paying ability, operating ability, profitability, development ability) and process (R&D ability, manufacturing, marketing, service) dimensions.

This study employs a quantitative approach using data from 94 top-ranking innovative enterprises in China, selected from the 2018 Global Innovation 1000 Study. Data were collected in two stages: first, composite scales were developed for measuring external collaboration and the process dimension of firm growth capability through content analysis of company disclosures and a panel of three experts (one professor and two doctoral students). The second stage involved collecting data on other variables from the China Stock Market & Accounting Research Database (CSMAR Database). To mitigate common method bias, data collection was divided into two stages with a one-month interval. Inter-rater reliability was assessed, yielding a Pearson correlation coefficient of 0.951 (p<0.01). Data from CSMAR were winsorized to control for extreme values. Three types of external collaboration (vertical, horizontal, and competitor) were measured using binary variables indicating the presence or absence of significant collaboration. Firm growth capability was measured using a composite score from financial and process dimensions, utilizing perceptual coding by raters on a five-point scale. R&D intensity was measured by the ratio of R&D expenditure to operating income, and R&D human capital by the percentage of highly skilled R&D workers. Control variables included ownership, age, size (log of employee count), and industry. Hierarchical regression analysis and bias-corrected bootstrapping were used to test direct and mediating effects.

The results support the hypothesis that all three types of external collaboration (vertical, horizontal, and competitor) have a positive and significant direct impact on firm growth capability. However, the effect of horizontal collaboration is stronger than that of vertical and competitor collaborations. All three types of external collaboration also have positive and significant effects on both R&D intensity and R&D human capital. Again, horizontal collaboration shows a stronger effect. Both R&D intensity and R&D human capital have a significant positive direct effect on firm growth capability. Mediation analysis reveals that R&D intensity significantly mediates the relationship between all three types of external collaboration and firm growth capability. In contrast, R&D human capital does not significantly mediate this relationship.

The findings address the research question by demonstrating the significant positive impact of external collaboration on firm growth capability, particularly highlighting the strong role of horizontal collaboration. The mediating role of R&D intensity suggests that external collaboration influences firm growth by stimulating investment in R&D. The lack of a mediating role for R&D human capital warrants further investigation. The results underscore the importance of strategically selecting collaborators and fostering strong R&D investment for sustainable growth. These findings advance open innovation theory by showing how various types of collaboration lead to enhanced firm growth, and they contribute to a nuanced understanding of the interplay between internal and external factors in driving firm growth.

This study makes three key contributions: it advances firm growth theory by exploring the impact of diverse external collaborations; it develops and tests an integrated model highlighting the mediating role of R&D intensity; and it provides context-specific insights for emerging economies like China. Managers should strengthen collaboration, prioritize R&D investment, and leverage external collaboration to boost R&D spending. Governments can use these findings to inform policies supporting sustainable firm growth. Future research should use longitudinal data, extend the study to other economies, improve the firm growth capability measurement, increase the sample size, and investigate additional moderating and mediating variables.

The study's limitations include the use of cross-sectional data, limiting causal inference; the focus on Chinese firms, impacting generalizability; potential limitations in the self-developed firm growth capability measure; a sample size that, while sufficient for analysis, could be expanded; and the limited scope of control variables. Future studies should address these limitations to enhance robustness and generalizability.