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Catch-Up by Indigenous Firms in the Software Industry and the Role of the Government in China: A Sectoral System of Innovation (SSI) Perspective

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  • Jun-Youn Kim

    ()

  • Tae-Young Park

    ()

  • Keun Lee

    ()

Abstract

This paper analyzes the market and technological catching-up of latecomer firms in two IT service sectors from a sectoral systems of innovation (SSI) perspective. It finds that indigenous software firms in China have selected different learning and catch-up strategies in the different technological regimes. For the online game sector where imitation is easier and incremental innovation is more important than radical innovation, these Chinese firms started with handling the publishing (or distribution) of games developed by foreign incumbents, and later on secured in-house game development capabilities by imitating the products of global leaders. In the applied software sector where both imitation and creative innovation are difficult, Chinese firms attained third-party technologies through M&As, and then differentiated their products by taking advantage of local specificities. However, such learning and acquisition would not have led to commercial success without government regulation against foreign companies, such as business restrictions in online games and exclusive procurement for indigenous products in applied software. Thus, this study underscores the importance of government and regulations in playing the role of “artificially opening” another window of opportunity for latecomers. Copyright Eurasia Business and Economics Society 2013

Suggested Citation

  • Jun-Youn Kim & Tae-Young Park & Keun Lee, 2013. "Catch-Up by Indigenous Firms in the Software Industry and the Role of the Government in China: A Sectoral System of Innovation (SSI) Perspective," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 3(1), pages 100-120, June.
  • Handle: RePEc:spr:eurasi:v:3:y:2013:i:1:p:100-120
    DOI: 10.14208/BF03353820
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    References listed on IDEAS

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    Cited by:

    1. Francesco Quatraro & Marco Vivarelli, 2015. "Drivers of Entrepreneurship and Post-entry Performance of Newborn Firms in Developing Countries," World Bank Research Observer, World Bank Group, vol. 30(2), pages 277-305.
    2. repec:spr:pharme:v:4:y:2014:i:1:p:31-50 is not listed on IDEAS
    3. Vivarelli, Marco, 2018. "Globalisation, structural change and innovation in emerging economies: The impact on employment and skills," MERIT Working Papers 037, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    4. Gustavo Crespi & Elena Arias-Ortiz & Ezequiel Tacsir & Fernando Vargas & Pluvia Zuñiga, 2014. "Innovation for economic performance: the case of Latin American firms," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 4(1), pages 31-50, June.

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