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Making the Transition from Imitation to Innovation: An Enquiry into China’s Evolving Institutions and Firm Capabilities

Author

Listed:
  • Wendy Dobson

    (Institute for International Business, Rotman School of Management)

  • A.E. Safarian

    (Rotman School of Management)

Abstract

How is the Chinese economy making the transition from imitation to innovation as the source of sustained long term growth? We address this question using the evolutionary approach to growth in which institutions support technical advance and enterprises develop capabilities to learn and innovate. Growth is seen as a series of disequilibria in which obstacles to innovation such as outdated institutions and weak incentive systems can cause growth to slow. We review existing literatures on institutions and firm behavior in China and compare these findings with those of our survey of Chinese firms in 2006. Industry and firm studies in the literature show how productivity is rising because of firm entry and exit rather than the adoption of new technologies. A striking feature both of the studies in the literature and our survey is the increasing competitive pressures on firms that encourage learning. Our survey of privately owned small and medium enterprises in five high tech industries in Zhejiang province found a market-based innovation system and evidence of much process and some product innovations. These enterprises respond to growing product competition and demanding customers with intensive internal learning, investment in R&D and a variety of international and research linkages.

Suggested Citation

  • Wendy Dobson & A.E. Safarian, 2008. "Making the Transition from Imitation to Innovation: An Enquiry into China’s Evolving Institutions and Firm Capabilities," Working Papers Series 11, Rotman Institute for International Business, Joseph L. Rotman School of Management, University of Toronto, revised Mar 2008.
  • Handle: RePEc:ttp:iibwps:11
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    File URL: http://www-2.rotman.utoronto.ca/userfiles/iib/File/IIB11.pdf
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    Cited by:

    1. repec:eee:proeco:v:190:y:2017:i:c:p:80-87 is not listed on IDEAS
    2. Huang, Ying Sophie & Wang, Chia-Jane, 2015. "Corporate governance and risk-taking of Chinese firms: The role of board size," International Review of Economics & Finance, Elsevier, vol. 37(C), pages 96-113.
    3. Gupeng Zhang & Hongbo Duan & Jianghua Zhou, 2016. "Investigating determinants of inter-regional technology transfer in China: a network analysis with provincial patent data," Review of Managerial Science, Springer, vol. 10(2), pages 345-364, March.
    4. Shang, Qingyan & Poon, Jessie P.H. & Yue, Qingtang, 2012. "The role of regional knowledge spillovers on China's innovation," China Economic Review, Elsevier, vol. 23(4), pages 1164-1175.
    5. Xie, Zhuan & Zhang, Xiaobo, 2014. "The patterns of patents in China:," IFPRI discussion papers 1385, International Food Policy Research Institute (IFPRI).
    6. repec:pal:jintbs:v:48:y:2017:i:6:d:10.1057_s41267-017-0083-y is not listed on IDEAS
    7. repec:kap:asiapa:v:34:y:2017:i:3:d:10.1007_s10490-016-9491-y is not listed on IDEAS
    8. Yanrui Wu, 2012. "R&D Behaviour in Chinese Firms," Economics Discussion / Working Papers 12-26, The University of Western Australia, Department of Economics.
    9. Fleisher, Belton M. & McGuire, William H. & Smith, Adam Nicholas & Zhou, Mi, 2013. "Intangible Knowledge Capital and Innovation in China," IZA Discussion Papers 7798, Institute for the Study of Labor (IZA).
    10. Dong, Jing & Gou, Yan-nan, 2010. "Corporate governance structure, managerial discretion, and the R&D investment in China," International Review of Economics & Finance, Elsevier, vol. 19(2), pages 180-188, April.
    11. Yi Zhang & Kaihua Chen & Guilong Zhu & Richard C. M. Yam & Jiancheng Guan, 2016. "Inter-organizational scientific collaborations and policy effects: an ego-network evolutionary perspective of the Chinese Academy of Sciences," Scientometrics, Springer;Akadémiai Kiadó, vol. 108(3), pages 1383-1415, September.
    12. repec:spr:scient:v:95:y:2013:i:1:d:10.1007_s11192-012-0802-x is not listed on IDEAS

    More about this item

    JEL classification:

    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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