In the recent literature, the assumption that institutions are homogeneous across regions within emerging economics has been challenged. Yet little attention has been paid to the role played by subnational region-specific institutions in firm’s innovativeness. Moreover, the influences of region-level and firm-level factors have been analyzed separately without paying attention to the linkages between them. Thus, this study first tries to investigate the influences of the cross-regional institutional idiosyncrasies in intellectual property (IP) protection and economic internationalization on the local firm’s innovativeness. Furthermore, the study explores how they can interact with a firm’s internal technological competences. The issues are explored using empirical evidence from the specific context of the e-commerce industry in China. It first contributes to institutional theory by identifying the role played by region-specific institutions in innovation. The second contribution lies in developing and testing a contingency perspective combining insights from institutional theory and the resource-based view.