Skip to main content Accesibility Help
×
×
Home

Product Innovations in Emerging Economies: The Role of Foreign Knowledge Access Channels and Internal Efforts in Chinese Firms

  • Jing Li (a1), Dong Chen (a2) and Daniel M. Shapiro (a1)
Abstract

In this paper, we theoretically and empirically investigate factors that contribute to product innovation by firms in emerging markets. Combining the innovation literature with the latecomer literature on ‘catch-up’ strategies of firms in newly industrialized economies, we posit that access to foreign knowledge is essential for fostering product innovation. In particular, we investigate how innovation clusters formed by inward foreign direct investments in an emerging market and export activities of a firm are effective channels for acquiring foreign knowledge. We also suggest firms that invest in research and development and marketing activities benefit further from access to foreign knowledge due to increased absorptive capacity. Empirically, we employ information on over 160,000 indigenous manufacturing firms in China in 2005–2006. We find strong empirical support for our theoretical framework and conclude by discussing the implications for both theory and managerial practice.

Copyright
References
Hide All
Ahuja, G. 2000. Collaboration networks, structural holes, and innovation: A longitudinal study. Administrative Science Quarterly, 45(3): 425455.
Ahuja, G., & Katila, R. 2001. Technological acquisitions and the innovation performance of acquiring firms: A longitudinal study. Strategic Management Journal, 22(3): 197219.
Aiken, L. S., & West, S. G. 1991. Multiple regression: Testing and interpreting interactions. Thousand Oaks, CA: Sage Publications.
Almeida, P., & Kogut, B. 1999. Localization of knowledge and the mobility of engineers in regional networks. Management Science, 45(7): 905917.
Altenburg, T., Schmitz, H., & Stamm, A. 2008. Breakthrough? China's and India's transition from production to innovation. World Development, 36(2): 325344.
Arrunada, B., & Vazquez, X. H. 2006. When your contract manufacturer becomes your competitor. Harvard Business Review, 84(9): 135144.
Atuahene-Gima, K., & Ko, A. 2001. An empirical investigation of the effect of market orientation and entrepreneurship orientation alignment on product innovation. Organization Science, 12(1): 5474.
Audretsch, D., & Feldman, M. 1996. R&D spillovers and the geography of innovation and production. American Economic Review, 86(3): 630640.
Bell, M., & Pavitt, K. 1993. Technological accumulation and industrial growth: Contrasts between developed and developing countries. Industrial & Corporate Change, 2(2): 157210.
Bernard, A., & Jensen, J. B. 1999. Exceptional exporter performance: Cause, effect, or both? Journal of International Economics, 47(1): 125.
Brown, S., & Eisenhardt, K. 1995. Product development: Past research, present findings and future directions. Academy of Management Review, 20(2): 343378.
Business Week. 2008. Most innovative companies: Smart ideas for tough times. April 28: 6163.
Chandy, R., Hopstaken, B., Narasimhan, O. M., & Prabhu, J. 2006. From invention to innovation: Conversion ability in product development. Journal of Marketing Research, 43(3): 494508.
Child, J., & Rodrigues, S. B. 2005. The internationalization of Chinese firms: A case for theoretical extension? Management and Organization Review, 1(3): 381410.
China Statistical Yearbook. 2006. Beijing, China: National Bureau of Statistics of China.
Cho, D.-S., Kim, D.-J., & Rhee, D. K. 1998. Latecomer strategies: Evidence from the semiconductor industry in Japan and Korea. Organization Science, 9(4): 489505.
Choung, J.-Y., Hwang, H.-R., Choi, J.-H., & Rim, M.-H. 2000. Transition of latecomer firms from technology users to technology generators: Korean semiconductor firms. World Development, 28(5): 969982.
Chudnovsky, D., Lopez, A., & Pupato, G. 2006. Innovation and productivity in developing countries: A study of Argentine manufacturing firms' behavior (1992–2001). Research Policy, 35(2): 266288.
Clerides, S. K., Lach, S., & Tybout, J. R. 1998. Is learning by exporting important? Micro-dynamic evidence from Colombia, Mexico, and Morocco. Quarterly Journal of Economics, 113(3): 903947.
Cohen, W. M., & Levinthal, D. A. 1989. Innovation and learning: The two faces of R&D. Economic Journal, 99(397): 569596.
Cohen, W. M., & Levinthal, D. A. 1990. Absorptive capacity: A new perspective on learning and innovation. Administrative Science Quarterly, 35(1): 128152.
Danneels, E. 2002. The dynamics of product innovation and firm competencies. Strategic Management Journal, 23(12): 10951121.
Dawar, N., & Dai, N. 2003. Cola wars in China: The future is here. Teaching case at Western Ontario, University of Richard Ivey School of Business.
Dosi, G. 1988. Sources, procedures, and microeconomic effects of innovation. Journal of Economics Literature, 26(3): 11201171.
Dougherty, D. 2001. Reimagining the differentiation and integration of work for sustained product innovation. Organization Science, 12(5): 612621.
Dunning, J. H., & Narula, R. 1995. The R&D activities of foreign firms in the United States. International Studies of Management & Organization, 25(1/2): 3974.
Evenson, R., & Westphal, L. 1995. Technological change and technology strategy. In Srinivasan, T. N. & Berhman, J. (Eds.), Handbook of development economics, vol. 3: 22092299. Amsterdam: North-Holland Press.
Fan, C. C., & Scott, A. J. 2003. Industrial agglomeration and development: A survey of spatial economic issues in East Asia and a statistical analysis of Chinese regions. Economic Geography, 79(3): 295319.
Globerman, S., Shapiro, D., & Vining, A. 2005. Clusters and intercluster spillovers: Their influence on the growth and survival of Canadian information technology firms. Industrial and Corporate Change, 14(1): 134.
Grant, R. M. 1996. Toward a knowledge-based theory of the firm. Strategic Management Journal, 17(Special issue): 109122.
Griffin, A., & Hauser, J. R. 1993. The voice of the customer. Marketing Science, 12(1): 127.
Grossman, G. M., & Helpman, E. 1993. Innovation and growth in the global economy. Cambridge, MA: MIT Press.
Hagedoorn, J., & Schakenraad, J. 1994. The effect of strategic technology alliances on company performance. Strategic Management Journal, 15(4): 291309.
Han, J. K., Kim, N., & Srivastava, R. K. 1998. Market orientation and organizational performance: Is innovation a missing link? Journal of Marketing, 62(4): 3045.
Hobday, M. 1995. Innovation in East Asia: The challenge to Japan. Aldershot: Edward Elgar.
Horng, C., & Chen, W. 2008. From contract manufacturing to own brand management: The role of learning and cultural heritage identity. Management and Organization Review, 4(1): 109133.
Jaffe, A., Trajtenberg, M., & Henderson, R. 1993. Geographic localization of knowledge spillovers as evidenced by patent citations. Quarterly Journal of Economics, 108(3): 577598.
Jefferson, G. H., Bai, H., Guan, X., & Yu, X. 2007. R&D performance in Chinese industry. Economics of Innovation and New Technology, 15(4): 345366.
Khanna, T., & Palepu, K. 1997. Why focused strategies may be wrong for emerging markets. Harvard Business Review, 75(4): 4151.
Khanna, T., & Palepu, K. G. 2006. Emerging giants. Harvard Business Review, 84(10): 6069.
Kim, L. 1997. Imitation to innovation: The dynamics of Korea's technological learning. Boston, MA: Harvard Business School Press.
Kogut, B., & Zander, U. 1992. Knowledge of the firm, combinative capabilities, and the replication of technology. Organization Science, 3(3): 383397.
Lall, S. 1987. Learning to industrialize: The acquisition of technological capability by India. London: Macmillan.
Lall, S. 1992. Technological capabilities and industrialization. World Development, 20(2): 165186.
Lankford, R. H., & Wyckoff, J. H. 1991. Modeling charitable giving using a Box-Cox standard Tobit model. Review of Economics and Statistics, 73(3): 460470.
Lu, Q. 2000. China's leap into the information age: Innovation and organization in the computer industry. Oxford: Oxford University Press.
Lukas, B. A., & Ferrell, O. C. 2000. The effect of market orientation on product innovation. Journal of the Academy of Marketing Science, 28(2): 239247.
Luo, Y., & Tung, R. L. 2007. International expansion of emerging market enterprises: A springboard perspective. Journal of International Business Studies, 38(4): 481498.
Lyles, M. A., & Salk, J. E. 1996. Knowledge acquisition from foreign parents in international joint ventures: An empirical examination in the Hungarian context. Journal of International Business Studies, 29(2): 154174.
Mathews, J. A. 2002. Competitive advantages of the latecomer firm: A resource-based account of industrial catch-up strategies. Asia Pacific Journal of Management, 19(4): 467488.
Mathews, J. A., & Cho, D.-S. 1999. Combinative capabilities and organizational learning in late-comer firms: The case of the Korean semiconductor industry. Journal of World Business, 34(2): 139156.
McDonald, J. F., & Moffitt, R. A. 1980. The uses of Tobit analysis. Review of Economics and Statistics, 62(2): 318321.
McKinsey & Co. 2008. The McKinsey Quarterly survey on innovation metrics. The McKinsey Quarterly Online. [Cited 7 December 2008.] Available from URL: http://www.mckinseyquarterly.com/PDFDownload.aspx?L2=21&L3=35&ar=2243
Meyer, K. E., & Sinani, E. 2009. When and where does foreign direct investment generate positive spillovers? A meta-analysis. Journal of International Business Studies, 40(7): 10751094.
National Bureau of Statistics of China. 2005. Annual census of industrial enterprises. Beijing: National Bureau of Statistics of China.
National Bureau of Statistics of China. 2006. Annual census of industrial enterprises. Beijing: National Bureau of Statistics of China.
Nicholls-Nixon, C. L., & Woo, C. Y. 2003. Technology sourcing and output of established firms in a regime of encompassing technological change. Strategic Management Journal, 24(7): 651666.
Peng, M. W., & Heath, P. S. 1996. The growth of the firm in planned economies in transition: Institutions, organizations, and strategic choice. Academy of Management Review, 21(2): 492528.
Porter, M. 1990. The competitive advantage of nations. New York: Free Press.
Porter, M. E. 1998. Clusters and the new economics of competition. Harvard Business Review, 76(6): 7790.
Salomon, R. M., & Shaver, J. M. 2005. Learning by exporting: New insights from examining firm innovation. Journal of Economics & Management Strategy, 14(2): 431460.
Saxenian, A. 1991. The origins and dynamics of production networks in Silicon Valley. Research Policy, 20(5): 423437.
Shishko, R., & Rostker, B. 1976. The economics of multiple job holding. American Economic Review, 66(3): 298308.
Tobin, J. 1958. Estimation of relationships for limited dependent variables. Econometrica, 26(1): 2436.
White, R. E., Hoskisson, R. E., Yiu, D. W., & Bruton, G. D. 2008. Employment and market innovation in Chinese business group affiliated firms: The role of group control systems. Management and Organization Review, 4(2): 225256.
Zhou, C., & Li, J. 2008. Product innovation in emerging market-based international joint ventures: An organizational ecology perspective. Journal of International Business Studies, 39(7): 11141132.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Management and Organization Review
  • ISSN: 1740-8776
  • EISSN: 1740-8784
  • URL: /core/journals/management-and-organization-review
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
×

Keywords

Metrics

Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed