key: cord-0752194-dwuw92pr
authors: Shi, Xianwei
title: Unpacking the puzzle of China's innovation S. Dai M. Taube
date: 2020-04-15
journal: nan
DOI: 10.1016/j.intman.2020.100757
sha: fcd56d5b2a5e7737d4976964c4be89c7e1d48dc3
doc_id: 752194
cord_uid: dwuw92pr

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tend to do, is akin to generalizing about the United Kingdom as Europe. In this sense, Chapter 12 offers a sneak peek and provides an important corrective for readers not familiar with the regional heterogeneity in innovation and development in China.

Among various institutional arrangements, China's national innovation policies have undoubtedly shaped the ecosystem, both positively and negatively. In Chapter 2, Dai, Davydova and Liu begin with this thread of discussion by offering a comprehensive analysis of the key policies at the national level to promote technological innovation in China. They argue that the evolution of China's innovation system since the end of 1970s is characterised by extended openness and resource sharing, that is, gradual opening up to FDI and improvement of resource accessibility to private firms in China. They also suggest a more indirect approach, as opposed to the conventional direct investment, should be enacted by the central government for creating a more innovation-friendly environment. In Chapter 8, Hou models the bottlenecks of innovation in the context of Chinese manufacturing firms, especially skill gaps, high taxation and lack of financial capital. S/he further offers policy instruments for mitigating these obstacles in a systematic way, as policies aiming at eliminating one bottleneck may exacerbate the problems generated by other obstacles. In Chapter 11, Liu and Liu provide a case study of a cable and wire manufacturing cluster in Guangdong Province to showcase a unique approach under the conditions of resource constraints, that is, a collaborative upgrading approach together with key actors in the regional innovation system including local government and universities. This chapter also highlights openness as a key strategy for local innovation systems to upgrade from low-value-added manufacturing to high-end products, which concurs with existing observations that such openness is especially favourable for local governments as a major means to attract external innovation resources .

Under the above institutional conditions, Chapters 3 and 4 offer an overview of how China's innovation and R&D capabilities have evolved over time. Specifically, in Chapter 3, Wu provides rich data regarding the R&D intensity and patents granted since the beginning of 21st century. S/he also points out the key sectors for China's R&D spending, which are computers, transport and electrical equipment. The OFDI to other Asian countries and Europe has also signalled the expansion of Chinese firms in an attempt to capture more advanced technological capabilities. In the same vein, Lacasa and Shubbak, in Chapter 4, examine "the evolution of technological capabilities in China since 1980 using patent indicators" (p. 90). They observe that China has been accumulating far greater technological capabilities compared to other emerging economies. Interestingly, they also find that China lags behind the likes of India and Brazil in patents in technological sectors that have emerged since 2012, suggesting a slowing down of the pace of structural change. Although the authors do not provide an explanation for this situation, one may speculate that this may be because progress in traditional sectors that China has already established may be swifter for latecomer countries as technological roadmaps are clearly set out by early movers (Cho et al., 1998) . As China progresses further into emerging, high-tech industries, where the blueprints of technological innovation are not entirely clear, the Chinese government may need to rethink their strategies in promoting new technological breakthroughs. It may well be that market mechanisms prove more effective than direct government involvement for the allocation of resources in these emerging industries that are marked with considerable uncertainty.

Chinese firms' distinctive innovation strategies are the focus in the remaining three chapters, with emphasis on the tactics that have been effectively implemented under the resource constraints of a transitional economy. In Chapter 6, Conle offers an "architectural innovation" account of China's innovation pattern. With this perspective, s/he illustrates how the Chinese automobile industry has enacted a "mix and match" strategy to build domestic automobile products using existing models as reference designs, hence reducing R&D costs and lowering entry barriers. Such an architectural approach may be a more feasible way for similar low-to mid-income economies in nurturing similar industries as a means to fulfill "bottom of the pyramid" demands (p. 143). Chapter 9 revisits the "windows of opportunity" (Lee and Ki, 2017) in the recent trend of digitalization. Wu and Ji identify virtual assets (e.g. big data), online platforms, rapid industry clock speed, and the new "wave curve" (p.207) as the most salient features of the structural change to value appropriation in the digital age. In Chapter 10, Zhou, Li and Yang further investigate how Chinese entrepreneurial firms enact "exploratory bricolage" (Baker and Nelson, 2005) to overcome the initial resource-constrained stage where start-ups lack the sufficient resources and capabilities needed for new market entry and the like. They illustrate how these firms exploit unprivileged resources and combine them in innovative ways to gain advantage and achieve stretch goals. Such an "exploratory bricolage" is attributed to the ambidextrous mindsets of Chinese managers stemming from the Chinese "Yin-Yang" philosophy, which addresses the balance between Yin (darkness and passiveness) and Yang (light and activeness) and is applied in their day-to-day operations and decision-making (Jing and Van de Ven, 2014; Li, 2012) .

Overall, this edited volume offers a timely discussion of China's catching-up in innovation and the ecosystems underlying this catching-up process. With themes spanning from institutions and policies to Chinese firms' innovation capabilities and strategies, the book makes an important extension to extant innovation studies in unpacking the puzzle of how China has exploited its unique institutional arrangements and diverse ecosystem actors to fulfill the ambitions of moving up the value chains to high-end R&D and advanced technological innovation. One shortcoming, besides the issue of the lack of a thematic structure tying the chapters together more clearly, would be the lack of a summary chapter providing an outlook for the future of China's innovation and what that might mean for the rest of the world. For developed economies, the future of innovation in China poses questions about how they may accommodate the challenges of new competitors, and for emerging economies it prompts a discussion of what might be learned from the Chinese approach. These are difficult questions to tackle, but it is time to contemplate these tensions in a volatile world.

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Latecomer strategies: evidence from the semiconductor industry in Japan and Korea

Institutional complementarities: the origins of experimentation in China's plug-in electric vehicle industry. Res. Policy 1-17

A yin-yang model of organizational change: the case of Chengdu Bus Group. Manag

Rise of latecomers and catch-up cycles in the world steel industry

Toward an integrative framework of indigenous research: the geocentric implications of yin-yang balance

Knowledge diffusion, market segmentation and technological catch-up: the case of the telecommunication industry in China

Organizing business ecosystems in emerging electric vehicle industry: structure, mechanism, and integrated configuration

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How do latecomer firms capture value from disruptive technologies? A secondary business-model innovation perspective