Themetic editors’ editorial for the CMS issue on innovation: pursuit of originality

Citation

Li, M., Wei, J. and McKiernan, P. (2015), "Themetic editors’ editorial for the CMS issue on innovation: pursuit of originality", Chinese Management Studies, Vol. 9 No. 1. https://doi.org/10.1108/CMS-02-2015-0033

Themetic editors’ editorial for the CMS issue on innovation: pursuit of originality

Article Type: Guest editorial From: Chinese Management Studies, Volume 9, Issue 1

Innovation maybe the ultimate driving force of a nation’s economic growth and prosperity. According to Porter’s (1998) theory of national competitive advantage, a nation’s economic development typically goes through the following several stages: resource driven, investment driven and innovation driven. Since China embarked on the road of economic reform and opening up to the world in late 1970s, several decades of economic development have achieved astonishing accomplishments, known as The China Miracle. The major engine for economic growth has been the huge investment infused into the economy, both from foreign direct investment and from the country’s own savings. This period fits with Porter’s definition of an investment-driven stage of economic development. As a result, China has gained the reputation of being the world’s manufacturing center. However, there has been ample evidence showing that this mode of economic development is coming to the end (China Daily, 2015). How China can move on to the next stage and become an innovation economy is a major challenge that policy makers and the corporate world are facing. Within China, there is a consensus that that the mode of economic development has to be changed. Therefore, the government has set a goal of transforming China into an innovative society by 2020. With all these scenarios in the background, we hope that the research findings in this issue on China’s innovation can help readers gain a snapshot of the current status of innovation in China.

The leading paper by Li, Wu, Yu and Foo raises a bold hypothesis – whether China is fast overtaking the USA in innovation. They use case studies on self and co-innovation to document the dynamics of knowledge flows and then suggest a brain-linguistic explanation to assert that China is likely to become an innovative leader in the future. The paper adopts a multi-method approach in conducting research on Chinese management studies by integrating quantitative and qualitative approaches.

Li and Reimers’ paper compares the two approaches of innovation in China: the government-driven approach and the grassroot approach of entrepreneurship. Ideas in this article are motivated partly by the controversial arguments in the Harvard Business Review article “Why China cannot innovate?” by Abrami et al. (2014). While they cite several cases of success in the top-down category, such as the high-speed train and the moon-landing project, they tone down the perspective of the bottom-up approach of innovation. Interestingly, Li and Reimers show that the top-down approach of government-driven innovation has not fared well, but the bottom-up approach has been quite successful and will have a chance of becoming the engine of innovation in China’s future information and communication technology industry development. The government’s role in promoting innovation will always be a controversial issue, but more case studies of this type might shine more light on its impact.

One major characteristics of the so-called Chinese model of economic development has been the strong power exercised by the government. Whether government support can generate innovation on the firm level is a controversial issue. Wei and Liu’s paper provides some empirical evidence on this issue. They collected the data of 343 enterprises in China that had been identified as innovative enterprises, including firm characteristics, government support data and patent data. Negative binomial regression was used to examine the relationship between government support and the innovation performance of firms. Results show that both vertical support in the form of direct research and development (R&D) subsidies and horizontal support in the form of regional innovation policy positively influenced the innovation performance of firms. In addition, direct R&D subsidies are more likely to experience the enhanced benefits of carrying out tax credit policy on the innovation performance of firms.

The paper by Ng and Law explores an interesting issue, which may be particularly important in the context of China, where Guanxi plays an important role in almost every facet of society. The authors explore how informal networks affect the innovation performance of firms. Using survey results from a sample of 315 executives, they find that “Education”, “Business Referral” and “Experience” are three core constructs exerting substantial influence on innovation performance. Also, they find that connectivity and size of informal networks do not matter and that informal networks show no significant influence on innovation performance.

While China is transforming from an investment demander to an investment supplier, it is interesting to learn of the performance of Chinese firms who are investing abroad. The paper by Lu, Lupton and Du investigates how organizational learning, absorptive capacity, cultural integration, specialization of the acquired firm and characteristics of transferred knowledge impact innovation performance subsequent to overseas acquisitions. Using survey responses from 222 Chinese multinational enterprises engaged in overseas acquisitions, they find that differences between acquiring and acquired firms’ capabilities, while having a positive direct influence, suppress the positive impact of organizational learning and absorptive capacity, suggesting that multinationals require some basic level of capabilities to appropriate value from overseas acquisitions. These findings may be helpful to Chinese firms who need to study international markets when they formulate their strategies on innovation.

Song’s paper analyzes some similar issues as those of Lu, Lupton and Du, the relations among organizational learning, absorptive capacity and imitation, but in the context of China. Their survey was sent to the middle or top management managers of 115 firms located in Beijing. Structural equation modeling with the maximum likelihood estimation procedures was applied to test the hypotheses developed in the research. The empirical results show that both organizational learning and absorptive capacity have positive impacts on innovation: imitation has a positive impact on absorptive capacity, and absorptive capacity mediates the relationship between imitation and innovation.

Of course, innovation is a complex and multidisciplinary topic. The research results included in this special issue are far from comprehensive and may even be biased or problematic. But given such limitations, we hope that their findings can ignite more research interest in the relevant issues on innovation in the unique political and cultural contexts of China.

Mingzhi Li, Jiuchang Wei and Peter McKiernan

References

Abrami, R., Kirby, W. and McFarlan, W. (2014), “Why China cannot innovate?”, Harvard Business Review, March, pp. 1-6.

China Daily (2015), “Five features signal that China is bidding farewell to the world manufacturing center”, China Daily, 26 January.

Porter, M. (1998), The Competitive Advantage of Nations, Free Press.