China Aims High in Science and Technology

In-house R&D and External Knowledge Acquisition – What Makes Chinese Firms Productive?

“…By encouraging FDI in the 1990s and 2000s, the manufacturing and R&D operations established by foreign firms in China were intended to provide technology transfer and spillovers (World Bank, 2012). Further, hundreds of research institutes were transformed into more commercially-oriented entities or directly restructured into firms (Jakobson, 2007) while universities started to conduct more applied R&D and founded numerous firms as spin-offs (Hu & Mathews, 2008). Earlier reforms followed the maybe naïve concept to grant market access to foreign firms in exchange for foreign knowledge, with little concern about possible absorption of knowledge by Chinese firms.…”

The Innovative Performance of China's National Innovation System

“…More recently, the NIS concept has been applied to map characteristics and differences in the structure of developing countries (Altenburg 2009;Joseph 2009;Padilla-Perez et al 2009) and encounters special application in the analysis of Asian economies (Liu/Lundin 2009;Liu 2009;Jakobson 2007;Chen/Shih, 2005). This can be linked to the idea that institutions are more important in the changing economic environment of developing countries than in developed countries (Lundvall et al 2002).…”

“…China imported 156 heavy industry facilities from the Soviet Union and established 400 research institutes which mainly focused on rever-se engineering (Liu/White 2001). Prominent achievements were the development of atomic and hydrogen bombs in 1964 and 1967, and the launch of satellites in 1970 (Jakobson 2007). These scientific successes were based upon Soviet assistance which shaped a bureaucratically and hierarchical R&D structure of China's NIS, in which research was carried out by public research institutes while state-owned enterprises (SOEs) focused on manufacturing (Serger/Breidne 2007).…”

“…Firms were deemed to become leaders in innovation, embedded in an increasingly competitive environment and motivated by profits induced by innovative performance (Nelson 1988;Schumpeter 1993). Consequently, hundreds of public research institutes were merged, abolished, or converted into enterprises (Jakobson 2007). The remaining institutes were granted self-Frankfurt School of Finance & Management Working Paper No.…”

“…The absence of domestic pioneers within in the population of key organizations and the corresponding lack of domestically created radical innovations demanded for substitution by foreign technology (Dobson/Safarian 2008). Consequently, firms' foreign direct investment (FDI), technology transfer, and expertise have been a strategic propulsive power for improving the innovative performance of China's NIS after the "Reform and Opening-Up" policies (Jakobson 2007). Besides the weak domestic capacity for radical innovations, also China's absorptive capacity was underdeveloped due to the command economy's heritage evidenced by the presence of complementors and adaptionists, although this capability is highly important for the diffusion of knowledge (Lundvall 2009).…”