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Competing with MNEs: developing manufacturing capabilities or innovation capabilities

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  • Xudong Gao
  • Ping Zhang
  • Xielin Liu

Abstract

A challenge facing local firms in China is the selection of effective technology strategies to compete against MNEs in the era of globalization. The existing literature suggests two alternatives, developing strong manufacturing capabilities or developing innovation capabilities, but provides no clear answer to the question of how to select one strategy or the other. This paper explores this issue by introducing two concepts: “barriers to appropriability” and “opportunities for improvement.” We develop four propositions to specify the boundary conditions for local firms to choose their technology strategies and analyze two local firms’ technology strategies to illustrate two of the propositions. We find that development of strong manufacturing capabilities will not necessarily be an effective strategy for local firms competing against MNEs. If there are opportunities for improvement, it might be possible for local firms to compete against MNEs by developing innovation capabilities and core technologies. Copyright Springer Science+Business Media, LLC 2007

Suggested Citation

  • Xudong Gao & Ping Zhang & Xielin Liu, 2007. "Competing with MNEs: developing manufacturing capabilities or innovation capabilities," The Journal of Technology Transfer, Springer, vol. 32(1), pages 87-107, April.
    • Handle: RePEc:kap:jtecht:v:32:y:2007:i:1:p:87-107
    DOI: 10.1007/s10961-006-9002-2
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    References listed on IDEAS

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    Cited by:

    1. Prud'homme, Dan & von Zedtwitz, Max & Thraen, Joachim Jan & Bader, Martin, 2018. "“Forced technology transfer” policies: Workings in China and strategic implications," Technological Forecasting and Social Change, Elsevier, vol. 134(C), pages 150-168.
    2. Shahid Yusuf, 2012. "From Technological Catch-up to Innovation : The Future of China’s GDP Growth," World Bank Publications - Reports 12781, The World Bank Group.
    3. Mingfang Li, 2007. "Innovation management: Chinese experience and global implications," The Journal of Technology Transfer, Springer, vol. 32(1), pages 1-8, April.
    4. Iris Claus & Les Oxley & Peilei Fan, 2014. "Innovation In China," Journal of Economic Surveys, Wiley Blackwell, vol. 28(4), pages 725-745, September.
    5. Keun Lee & Xudong Gao & Xibao Li, 2017. "Industrial catch-up in China: a sectoral systems of innovation perspective," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 10(1), pages 59-76.
    6. Meeta Dasgupta & R.K. Gupta & A. Sahay, 2011. "Linking Technological Innovation, Technology Strategy and Organizational Factors," Global Business Review, International Management Institute, vol. 12(2), pages 257-277, June.
    7. Di Minin, Alberto & Zhang, Jieyin & Gammeltoft, Peter, 2012. "Chinese foreign direct investment in R&D in Europe: A new model of R&D internationalization?," European Management Journal, Elsevier, vol. 30(3), pages 189-203.

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    More about this item

    Keywords

    Catch up; Globalization; Innovation capability; Manufacturing capability; Technology strategy; M10;
    All these keywords.

    JEL classification:

    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General

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