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Corporate Governance and Technological Capability Development: Three Case Studies in the Chinese Auto Industry

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  • Jiajia Liu
  • Andrew Tylecote

Abstract

This paper examines how firms' technological capability development is affected by corporate governance, broadly understood: “how and by whom the firm is directed and controlled”. Three state-owned companies are studied. Shanghai Auto Industry Corporation (SAIC) is a long-established “favoured” enterprise controlled on rather traditional lines. Chery is a small under-funded latecomer that receives exceptional “engagement” from its controlling local and provincial government. Guizhou Tyre (GTC) is long-established but also receives exceptional engagement. The firms' governance structures and their processes of technological capability building were tracked and compared. Data on SAIC and Chery was mainly from secondary sources; on GTC, from extensive interviewing of management and site observations. There were two main findings: first, it was the two with unusual engagement which were more successful in developing “endogenous” or “self-reliant” technological capability. Second, two alternative technological strategies could be distinguished: “bundled” or “unbundled” technology acquisition. Chery and GTC chose “unbundling”. We show why it was more successful and why it followed from the corporate governance situation.

Suggested Citation

  • Jiajia Liu & Andrew Tylecote, 2009. "Corporate Governance and Technological Capability Development: Three Case Studies in the Chinese Auto Industry," Industry and Innovation, Taylor & Francis Journals, vol. 16(4-5), pages 525-544.
  • Handle: RePEc:taf:indinn:v:16:y:2009:i:4-5:p:525-544
    DOI: 10.1080/13662710903053805
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    1. repec:eee:iburev:v:26:y:2017:i:5:p:1009-1021 is not listed on IDEAS
    2. Amighini, Alessia A. & Franco, Chiara, 2013. "A sector perspective on Chinese outward FDI: The automotive case," China Economic Review, Elsevier, vol. 27(C), pages 148-161.
    3. Xiao, Yangao & Tylecote, Andrew & Liu, Jiajia, 2013. "Why not greater catch-up by Chinese firms? The impact of IPR, corporate governance and technology intensity on late-comer strategies," Research Policy, Elsevier, vol. 42(3), pages 749-764.

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