IDEAS home Printed from https://ideas.repec.org/a/unc/tncjou/94.html
   My bibliography  Save this article

How does policy create an opportunity window for China’s digital economy?

Author

Listed:
  • Si Zhang
  • Shirong Gu
  • Yuxuan Tang

Abstract

From the initial stage of “bringing in” foreign firms to the stage of “going out” (going global), the four-decade development process of China is not just about its participation in globalization, but also about Chinese firms’ innovation based on global knowledge sourcing. This study provides a new interpretation of the technology catching-up of Chinese firms, incorporating the theory of windows of opportunity, considering policies as windows for international knowledge sourcing and technology catch-up. It assesses the impact on innovation performance of inward and outward foreign direct investment policies as institutional windows for knowledge sourcing, aims to identify the effective width of windows of opportunity and establishes how these policies lead to outstanding innovation performance by latecomers over time by leveraging external knowledge. Threshold models were adopted using data from multiple sources on 187 Chinese listed firms in the digital industry, including 2,807 firm-year observations. The results show that nonlinear relationships exist between institutional windows and innovation performance. The roles and mechanisms of institutional windows of opportunities in Chinese firms’ knowledge-sourcing process demonstrate the decisive effects of the Government’s internationalization policies and their role in promoting the development of Chinese digital technologies. Implications are elaborated for both policymakers and Chinese multinational firms in the digital industry.

Suggested Citation

  • Si Zhang & Shirong Gu & Yuxuan Tang, . "How does policy create an opportunity window for China’s digital economy?," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    • Handle: RePEc:unc:tncjou:94
    as

    Download full text from publisher

    File URL: https://unctad.org/system/files/official-document/diaeia2022d4a2_en.pdf?repec
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bernhard Dachs & Georg Zahradnik, . "From few to many: main trends in the internationalization of business R&D," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    2. Erica Mazzola & Manfredi Bruccoleri & Giovanni Perrone, 2012. "The Effect Of Inbound, Outbound And Coupled Innovation On Performance," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 16(06), pages 1-27.
    3. Lee, Keun & Malerba, Franco, 2017. "Catch-up cycles and changes in industrial leadership:Windows of opportunity and responses of firms and countries in the evolution of sectoral systems," Research Policy, Elsevier, vol. 46(2), pages 338-351.
    4. Samina Sabir & Anum Rafique & Kamran Abbas, 2019. "Institutions and FDI: evidence from developed and developing countries," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 5(1), pages 1-20, December.
    5. Fu, Xiaolan & Sun, Zhongjuan & Ghauri, Pervez N., 2018. "Reverse knowledge acquisition in emerging market MNEs: The experiences of Huawei and ZTE," Journal of Business Research, Elsevier, vol. 93(C), pages 202-215.
    6. Mu, Qing & Lee, Keun, 2005. "Knowledge diffusion, market segmentation and technological catch-up: The case of the telecommunication industry in China," Research Policy, Elsevier, vol. 34(6), pages 759-783, August.
    7. Guennif, Samira & Ramani, Shyama V., 2012. "Explaining divergence in catching-up in pharma between India and Brazil using the NSI framework," Research Policy, Elsevier, vol. 41(2), pages 430-441.
    8. Lee Branstetter, 2018. "China’s Forced Technology Transfer Problem—And What to Do About It," Policy Briefs PB18-13, Peterson Institute for International Economics.
    9. Child, John & Rodrigues, Suzana B., 2005. "The Internationalization of Chinese Firms: A Case for Theoretical Extension?1," Management and Organization Review, Cambridge University Press, vol. 1(3), pages 381-410, November.
    10. Chengqi Wang & Junjie Hong & Mario Kafouros & Mike Wright, 2012. "Exploring the role of government involvement in outward FDI from emerging economies," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 43(7), pages 655-676, September.
    11. Snehal Awate & Marcus M Larsen & Ram Mudambi, 2015. "Accessing vs sourcing knowledge: A comparative study of R&D internationalization between emerging and advanced economy firms," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 46(1), pages 63-86, January.
    12. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, April.
    13. Jun Xia & Xufei Ma & Jane W. Lu & Daphne W. Yiu, 2014. "Outward foreign direct investment by emerging market firms: A resource dependence logic," Strategic Management Journal, Wiley Blackwell, vol. 35(9), pages 1343-1363, September.
    14. Sergio G. Lazzarini, 2015. "Strategizing by the government: Can industrial policy create firm-level competitive advantage?," Strategic Management Journal, Wiley Blackwell, vol. 36(1), pages 97-112, January.
    15. Samira Guennif & Shyama V. Ramani, 2012. "Explaining divergence in catching-up in pharmaceuticals between India and Brazil using the National System Innovation framework," Post-Print hal-01345868, HAL.
    16. Dahlander, Linus & Gann, David M., 2010. "How open is innovation?," Research Policy, Elsevier, vol. 39(6), pages 699-709, July.
    17. Howard Pack & Kamal Saggi, 2006. "Is There a Case for Industrial Policy? A Critical Survey," The World Bank Research Observer, World Bank, vol. 21(2), pages 267-297.
    18. Yap, Xiao-Shan & Truffer, Bernhard, 2019. "Shaping selection environments for industrial catch-up and sustainability transitions: A systemic perspective on endogenizing windows of opportunity," Research Policy, Elsevier, vol. 48(4), pages 1030-1047.
    19. Deng, Ping, 2009. "Why do Chinese firms tend to acquire strategic assets in international expansion?," Journal of World Business, Elsevier, vol. 44(1), pages 74-84, January.
    20. John H Dunning, 1998. "Location and the Multinational Enterprise: A Neglected Factor?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 29(1), pages 45-66, March.
    21. Fu, Xiaolan & Pietrobelli, Carlo & Soete, Luc, 2011. "The Role of Foreign Technology and Indigenous Innovation in the Emerging Economies: Technological Change and Catching-up," World Development, Elsevier, vol. 39(7), pages 1204-1212, July.
    22. Yadong Luo & Rosalie L Tung, 2007. "International expansion of emerging market enterprises: A springboard perspective," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(4), pages 481-498, July.
    23. Shin, Jang-Sup, 2017. "Dynamic catch-up strategy, capability expansion and changing windows of opportunity in the memory industry," Research Policy, Elsevier, vol. 46(2), pages 404-416.
    24. Ram Mudambi, 2008. "Location, control and innovation in knowledge-intensive industries," Journal of Economic Geography, Oxford University Press, vol. 8(5), pages 699-725, September.
    25. Franco Malerba & Richard Nelson, 2011. "Learning and catching up in different sectoral systems: evidence from six industries," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 20(6), pages 1645-1675, December.
    26. Xielin Liu & Sylvia Schwaag Serger & Ulrike Tagscherer & Amber Y. Chang, 2017. "Beyond catch-up—can a new innovation policy help China overcome the middle income trap?," Science and Public Policy, Oxford University Press, vol. 44(5), pages 656-669.
    27. John Child & Suzana B. Rodrigues, 2005. "The Internationalization of Chinese Firms: A Case for Theoretical Extension?," Management and Organization Review, International Association of Chinese Management Research, vol. 1(3), pages 381-410, November.
    28. Rui, Huaichuan & Yip, George S., 2008. "Foreign acquisitions by Chinese firms: A strategic intent perspective," Journal of World Business, Elsevier, vol. 43(2), pages 213-226, March.
    29. Keun Lee & Mansoo Jee & Jong-Hak Eun, 2011. "Assessing China's Economic Catch-Up at the Firm Level and Beyond: Washington Consensus, East Asian Consensus and the Beijing Model," Industry and Innovation, Taylor & Francis Journals, vol. 18(5), pages 487-507.
    30. Felipe Monteiro & Julian Birkinshaw, 2017. "The external knowledge sourcing process in multinational corporations," Strategic Management Journal, Wiley Blackwell, vol. 38(2), pages 342-362, February.
    31. Lei Guo & Marina Yue Zhang & Mark Dodgson & David Gann & Hong Cai, 2019. "Seizing windows of opportunity by using technology-building and market-seeking strategies in tandem: Huawei’s sustained catch-up in the global market," Asia Pacific Journal of Management, Springer, vol. 36(3), pages 849-879, September.
    32. Clegg, Jeremy & Lin, Hsin Mei & Voss, Hinrich & Yen, I-Fan & Shih, Yi Tien, 2016. "The OFDI patterns and firm performance of Chinese firms: The moderating effects of multinationality strategy and external factors," International Business Review, Elsevier, vol. 25(4), pages 971-985.
    33. Rugman, Alan M. & Li, Jing, 2007. "Will China's Multinationals Succeed Globally or Regionally?," European Management Journal, Elsevier, vol. 25(5), pages 333-343, October.
    34. Peter J Buckley & Jeremy Clegg & Chengqi Wang, 2007. "Is the relationship between inward FDI and spillover effects linear? An empirical examination of the case of China," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(3), pages 447-459, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lei Guo & Marina Yue Zhang & Mark Dodgson & David Gann & Hong Cai, 2019. "Seizing windows of opportunity by using technology-building and market-seeking strategies in tandem: Huawei’s sustained catch-up in the global market," Asia Pacific Journal of Management, Springer, vol. 36(3), pages 849-879, September.
    2. Li, Jing & Oh, Chang Hoon, 2016. "Research on emerging-market multinational enterprises: Extending Alan Rugman’s critical contributions," International Business Review, Elsevier, vol. 25(3), pages 776-784.
    3. Li, Jian & Strange, Roger & Ning, Lutao & Sutherland, Dylan, 2016. "Outward foreign direct investment and domestic innovation performance: Evidence from China," International Business Review, Elsevier, vol. 25(5), pages 1010-1019.
    4. Ping Deng & Andrew Delios & Mike W. Peng, 2020. "A geographic relational perspective on the internationalization of emerging market firms," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(1), pages 50-71, February.
    5. Kerstin J. Schaefer, 2020. "Catching up by hiring: The case of Huawei," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(9), pages 1500-1515, December.
    6. Chabowski, Brian R. & Samiee, Saeed, 2023. "A bibliometric examination of the literature on emerging market MNEs as the basis for future research," Journal of Business Research, Elsevier, vol. 155(PB).
    7. Hu, Helen Wei & Cui, Lin, 2014. "Outward foreign direct investment of publicly listed firms from China: A corporate governance perspective," International Business Review, Elsevier, vol. 23(4), pages 750-760.
    8. Vukicevic, Jelena & Fallon, Grahame & Ott, Ursula F., 2021. "A theoretical and empirical investigation into investment activities of technologically-intensive Chinese state-owned enterprises in the UK," International Business Review, Elsevier, vol. 30(1).
    9. Su, Cong & Kong, Lingshuang & Ciabuschi, Francesco & Holm, Ulf, 2020. "Demand and willingness for knowledge transfer in springboard subsidiaries of Chinese multinationals," Journal of Business Research, Elsevier, vol. 109(C), pages 297-309.
    10. Kwak, Kiho & Kim, Namil, 2022. "Industrial Leadership Changes without Technological Discontinuity: Modularization, Institution-Led Market Discontinuity, and Market Development Strategy," Technological Forecasting and Social Change, Elsevier, vol. 180(C).
    11. Chen, Yuhuilin & Gunessee, Saileshsingh & Hua, Xiuping, 2022. "Emerging market multinationals’ pursuit of strategic assets through cross-border acquisitions," Research in International Business and Finance, Elsevier, vol. 63(C).
    12. Dylan Sutherland & John Anderson & Peter Hertenstein, 2018. "Is the Strategic Asset Seeking Investment Proclivity of Chinese MNEs Different to that of Developed Market MNEs? A Comparative Analysis of Location Choice and Orientation," Management International Review, Springer, vol. 58(6), pages 911-933, December.
    13. Anderson, John & Sutherland, Dylan & Severe, Sean, 2015. "An event study of home and host country patent generation in Chinese MNEs undertaking strategic asset acquisitions in developed markets," International Business Review, Elsevier, vol. 24(5), pages 758-771.
    14. Ajai S Gaur & Xufei Ma & Zhujun Ding, 2018. "Home country supportiveness/unfavorableness and outward foreign direct investment from China," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(3), pages 324-345, April.
    15. Haifeng Yan & Juan Wang & Ping Deng, 2018. "Outbound linkage and inbound leverage for emerging multinationals: A signaling theory perspective," Asia Pacific Journal of Management, Springer, vol. 35(2), pages 347-372, June.
    16. Manuel Hensmans & Guangyan Liu, 2018. "How Do the Normativity of Headquarters and the Knowledge Autonomy of Subsidiaries Co-Evolve? Capability-Upgrading Processes of Chinese Subsidiaries in Belgium," Management International Review, Springer, vol. 58(1), pages 85-119, February.
    17. Cui, Lin & Meyer, Klaus E. & Hu, Helen Wei, 2014. "What drives firms’ intent to seek strategic assets by foreign direct investment? A study of emerging economy firms," Journal of World Business, Elsevier, vol. 49(4), pages 488-501.
    18. Dirk Holtbrügge & Sue Claire Berning, 2018. "Market Entry Strategies and Performance of Chinese Firms in Germany: The Moderating Effect of Home Government Support," Management International Review, Springer, vol. 58(1), pages 147-170, February.
    19. Ludan Wu & Dylan Sutherland & John R. Anderson, . "Are emerging market MNEs more attracted towards better patent enforcement regimes when undertaking greenfield R&D-focused FDI?," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    20. Grimm Noh & Dongyoub Shin, 2018. "The different influences of the government and politicians on the international expansion of Chinese firms," Asian Business & Management, Palgrave Macmillan, vol. 17(5), pages 366-396, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:unc:tncjou:94. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kumi Endo (email available below). General contact details of provider: https://edirc.repec.org/data/unctach.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.