Skip to main content

Advertisement

SpringerLink
Log in

Product innovation and process innovation in SOEs: evidence from the Chinese transition

  • Published:
The Journal of Technology Transfer Aims and scope Submit manuscript

Abstract

This paper offers an analysis of the influence of management behavior on the relationship between factors such as market, governance and resources of a firm, and the choice of the type of technological innovation in Chinese state-owned enterprises (SOEs). The authors develop a structural equation model and 12 hypotheses and test the model and hypotheses using a sample of 274 SOEs in China. This study discovers that the choice of innovation types among Chinese SOEs depends on the turbulence in the environment, and on the organizational resources. The key contributions of the study include: testing existing theories of innovation in the context of Chinese SOEs; studying the factors that affect product innovation and process innovation in that context; and demonstrating that market forces and internal governance simultaneously influence SOE innovation.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2

Similar content being viewed by others

References

  • Achilladelis, B., & Antonakis, N. (2001) The dynamics of technological innovation: The case of the pharmaceutical industry. Research Policy, 30(4), 535–588.

    Article  Google Scholar 

  • Adler, N. J., Brahm, R., & Graham, J. L. (1992). Strategy implementation: A comparison of face-to-face negotiations in the People’s Republic of China and The United States. Strategic Management Journal, 13(6), 449–466.

    Google Scholar 

  • Andrews, W. A., & Dowling, M. J. (1998). Explaining performance changes in newly privatized firms. Journal of Management Studies, 35(5), 601–618.

    Article  Google Scholar 

  • Arrow, K. J. (1962). Economic welfare and the allocation of resources for invention. In R. R. Nelson (Eds.), The rate and direction of inventive activity (pp. 609–625). Princeton, NJ: Princeton University Press.

    Google Scholar 

  • Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120.

    Article  Google Scholar 

  • Boardman, A. E., & Vining, A. R. (1989). Ownership and performance in competitive environments: A comparison of the performance of private, mixed, and state-owned enterprises. Journal of Law and Economics, 32(1), 1–33.

    Article  Google Scholar 

  • Boycko, M., Shleifer, A., & Vishny, R. W. (1994). Voucher privatization. Journal of Financial Economics, 35(2), 249–266.

    Article  Google Scholar 

  • Boyd, B. K., Dess, G., & Rasheed, A. (1993). Divergence between archival and perceptual measures of the environment: Causes and consequences. Academy of Management Review, 18(2), 204–226.

    Article  Google Scholar 

  • Brown, S. L., & Eisenhardt, K. M. (1997). The art of continuous change: Linking Complexity Theory and time-paced evolution in relentlessly shifting organizations. Administrative. Science Quarterly, 42(1), 1–34.

    Article  Google Scholar 

  • Butler, R. J., Price, D. H. R. Coates, P. D., & Pike, R. H. (1998). Organizing for innovation: Loose or tight control? Long Range Planning, 31(5), 775–782.

    Article  Google Scholar 

  • Cohen, W. M., & Levin, R. C. (1989). Empirical studies of innovation and market structure. In R. Schmalensee, & R. D. Willig (Eds.), Handbook of industrial organization (pp. 1059–1107). Amsterdam: Elsevier Science.

    Google Scholar 

  • Coles, J. W., McWilliams, V. B., & Sen, N. (2001). An examination of the relationship of governance mechanisms to performance. Journal of Management, 27(1), 23–50.

    Article  Google Scholar 

  • Cooper, R. G. (1998). Benchmarking new product performance: Results of the best practices study. European Management Journal, 16(1), 1–18.

    Article  Google Scholar 

  • Daft, R. L. (1978). A dual-core model of organizational innovation. Academy Management, 21(2), 193–210.

    Article  Google Scholar 

  • Damanpour, F., & Evan, W. M. (1984). Organizational innovation and performance: The problem of ‘organizational lag’. Administrative Science Quarterly, 29(3), 392–409.

    Article  Google Scholar 

  • Damanpour, F. (1987). The adoption of technological, administrative and ancillary innovation: Impact of organizational factors. Journal of Management, 13(4), 675–688.

    Article  Google Scholar 

  • Davis, J. H., Schoorman, F. D., & Donaldson, L. (1997). Toward a stewardship theory of management. Academy of Management Review, 22(1), 20–47.

    Article  Google Scholar 

  • De Mente, B. (1989). Chinese etiquette and ethics in business. Lincolnwood, IL: NTC Business Books.

    Google Scholar 

  • DeTienne, R. D., & Koberg, C. S. (2002). The impact of environmental and organizational factors on discontinuous innovation within high-technology industries. IEEE Transactions on Engineering Management, 49(4), 352–364.

    Article  Google Scholar 

  • Dierickx, I., & Cool, K. (1989). Asset stock accumulation and sustainability of competitive advantage. Management Science, 35(12), 1504–1511.

    Google Scholar 

  • Dosi, G. (1988). Sources, procedures, and microeconomic effects of innovation. Journal of Economic Literature, 26(3), 1120–1171.

    Google Scholar 

  • Dougherty, D., & E. H. Bowman (1995). The effects of organizational downsizing on product innovation. California Management Review, 37(4), 28–44.

    Google Scholar 

  • Drew, S. A. W. (1997). From knowledge to action: The impact of benchmarking on organizational performance. Long Range Planning, 30(3), 427–441.

    Article  Google Scholar 

  • Du, J., & Yong, Z. (1998). Unchaining China’s SOEs: Interviews with ten leading economists on SOE reform. Harvard China Review, 1(1), 169–194.

    Google Scholar 

  • Ester, M. (2000). Explaining the decisions to carry out product and process innovation: The Spanish case. The Journal of High Technology Management Research, 10(2), 223–242.

    Google Scholar 

  • Freeman, C. (1987). Technology policy and economic performance: Lessons from Japan. London: Education Press.

    Google Scholar 

  • Goldsmith, M. V. (1990). State policies and programs for encouraging innovation and technology development. In State and local initiatives on productivity. Technology, and Innovation: Enhancing a National Resource for International Competitiveness, Washington, DC: Advisory Commission on Intergovernmental Relations, pp. 258–275.

  • Graves, S. B. (1988). Institutional ownership and corporate R&D in the computer industry. Academy of Management Journal, 31(2), 417–428.

    Article  Google Scholar 

  • Grenadier, S. R., & Weiss, A. M. (1997). Investment in technological innovations: An option pricing approach. Journal of Financial Economics, 44(3), 397–416.

    Article  Google Scholar 

  • Grover, V., & Goslar, M. D. (1993). The initiation, adoption, and implementation of telecommunications technologies in U.S. organizations. Journal of Management Information System, 10(1), 141–163.

    Google Scholar 

  • Hansen, G. S., & Hill, C. W. L. (1991). Are institutional investors myopic? A time series study of four technology-driven industries. Strategic Management Journal, 12(1), 1–16.

    Google Scholar 

  • Hitt, M. A., Keats, B. W., & DeMarie, S. M. (1995). Navigating in the new competitive landscape: Building competitive advantage and strategic flexibility in the 21st century. Paper presented at the annual meeting of Strategic Management Society, Mexico City.

  • Hitt, M. A., Hoskisson, R. E., Johnson, R. A., & Moesel, D. D. (1996). The market for corporate control and firm innovation. Academy of Management Journal, 39(5), 1084–1119.

    Article  Google Scholar 

  • Itami, H. (1987). Mobilizing invisible assets. Cambridge, MA: Harvard University Press.

    Google Scholar 

  • Jaworski, B. J., & Kohli, A. K. (1993). Market orientation: Antecedents and consequences. Journal of Marketing, 57(3), 53–70.

    Article  Google Scholar 

  • Jefferson, G. H, & Rawski, T. G. (1994). Enterprise reform in Chinese Industry. Journal of Economic Perspectives, 8(2), 47–70.

    Google Scholar 

  • Jelinek, M., & Schoonhoven, C. B. (1993). The innovation marathon: Lessons from high technology enterprises. San Francisco: Jossey-Bass Publishers.

    Google Scholar 

  • Jensen, M. C. (1993). The modern industrial revolution, exit, and the failure of internal control systems. Journal of Finance, 48(3), 831–880.

    Article  Google Scholar 

  • Kao, S.-C. (1996). China’s economic reform. london: Macmillan Press.

    Google Scholar 

  • Kovenock, D., & Phillips, G. M. (1995). Capital structure and product market behavior: An examination of plant closing and investment decisions, Center for Economic Studies Discussion Paper, No. 95–4.

  • Kraft, K. (1990). Are Product- and Process-Innovations Independent of Each Other? Applied Economics, 22(8), 1029–1038.

    Google Scholar 

  • Kynge, J. (November 13, 2000). Rising giant ‘enters the world’. Financial Times, 13(7), 25–39.

  • Lenos, T. (1996). Real options: Managerial flexibility and strategy in resource allocation. Cambridge, MA: The MIT Press.

    Google Scholar 

  • Levin, S. G., Levin, S. L., & Meisel, J. B. (1987). A dynamic analysis of the adoption of a new technology: The case of optical scanners. Review of Economics and Statistics, 69(1), 12–17.

    Article  Google Scholar 

  • Li, M., & Simerly, R. L. (1998). The moderating effect of environmental dynamism on the ownership and performance relation. Strategy Management Journal, 19(2), 169–179.

    Article  Google Scholar 

  • Li, Y. (1994). Research on technology innovation mechanism of enterprises. Xi’an, China: Xi’an Jiaotong University Press.

    Google Scholar 

  • Lu, Q., & Lazonick, W. (2001). The organization of innovation in a transitional economy: Business and Government in chinese electronic publishing. Research Policy, 30(1), 55–77.

    Article  Google Scholar 

  • Lundvall, B. A. (1992). National system of innovation: Towards a theory of innovation and interactive learning. London: Pinter Press.

    Google Scholar 

  • Maddala, G. S., & Knight, P. (1967). International diffusion of technical change—A case study of the oxygen steel making process. Economic Journal, 77, 531–558.

    Article  Google Scholar 

  • Maurer, B. (1999). Innovation and investment under financial constraints and product market competition. International Journal of Industrial Organization, 17(4), 455–476.

    Article  Google Scholar 

  • Meyer, A. D., & Goes, J. B. (1988). Organizational assimilation of innovations: A multilevel contextual analysis. Academy of Management Journal, 31(4), 897–923.

    Article  Google Scholar 

  • Miller D., & Friesen, P. H. (1983). Strategy-making and environment: The third link. Strategic Management Journal, 4(3), 221–234.

    Google Scholar 

  • Mowery, D., & Rosenberg, N. (1979). The influence of market demand upon innovation: A critical review of some recent empirical studies. Research Policy, 8(2), 102–153.

    Article  Google Scholar 

  • Nair, S. K. (1995). Modeling strategic investment decision under sequential technological change. Management Science, 41(2), 282–297.

    Article  Google Scholar 

  • Nee, V. (1992). Organizational dynamics of market transition: hybrid forms, property rights, and mixed economy in China. Administrative Science Quarterly, 37(1), 1–27.

    Article  Google Scholar 

  • Nolan, P., & Wang, X. (1999). Beyond privatization: Institutional innovation and growth in China’s large state-owned enterprises. World Development, 27(1), 169–200.

    Article  Google Scholar 

  • O’Keefe, T. B., & Homer, P. M. (1987). Selecting cost-effective survey methods: Foot-in-door and prepaid monetary incentives. Journal of Business Research, 15(4), 365–376.

    Article  Google Scholar 

  • Phillips, G. M. (1995). Increased debt and industry product markets: An empirical analysis. Journal of Financial Economics, 37(2), 189–238.

    Article  Google Scholar 

  • Porter, M. E. (1985). Competitive advantage: Creating and sustaining superior performance. New York: Free Press.

    Google Scholar 

  • Porter, M. E. (1990). The competitive advantage of nations. London: Macmillan Press.

    Google Scholar 

  • Qi, D., Wu, W., & Zhang, H. (2000). Shareholding structure and corporate performance of partially privatized firms: Evidence from listed Chinese companies. Pacific-Basin Finance Journal, 8(5), 587–610.

    Article  Google Scholar 

  • Rawski, T. G. (1994). Chinese industrial reform: Accomplishments, prospects, and implications. American Economic Review, 84(2), 271–275.

    Google Scholar 

  • Roe, M. J. (1990). Political and legal restraints on ownership and control of public companies. Journal of Financial Economics, 27(1), 7–42.

    Article  Google Scholar 

  • Roessner J. D. (Eds.) (1988). Government innovation policy: Design implementation, evaluation. New York: St. Martin’s Press.

    Google Scholar 

  • Roland, G., & Sekkat, K. (2000). Managerial career concerns, privatization and restructuring in transition economies. European Economic Review, 44(10), 1857–1872.

    Article  Google Scholar 

  • Romijn, H., & Albaladejo, M. (2002). Determinants of innovation capability in small electronics and software firms in Southeast England. Research Policy, 31, 1053–1067.

    Article  Google Scholar 

  • Rothwell, R., & Zegveld, W. (1981). Industrial innovation and public policy: Preparing for the 1980s and the 1990s. Westport, CT: Greenwood Press.

    Google Scholar 

  • Rothwell, R., & Zegveld, W. (1988). An assessment of government innovation policies in government innovation policy. In J. D. Roessner (Eds.), Government innovation policy: Design implementation, evaluation (pp. 19–35). New York: St. Martin’s Press.

    Google Scholar 

  • Schumpeter, J. A. (1975). Capitalism, socialism and democracy, (3rd ed.). New York: Harper & Row.

    Google Scholar 

  • Scott-Kemmis, D., Darling, T., & Johnston, R. (1988). Innovation for the 1990s: New challenges for the technology policy and strategy. Canberra: Department of Industry, Technology and Commerce.

  • Selnes, F., Jaworski, B. J., & Kohli, A. K. (1997). Market orientation in U.S. and scandinavian companies: A cross-cultural study. In Marketing science institute report, No. 97–107, Cambridge, MA: Marketing Science Institute.

  • Shleifer, A., & Vishny, R. W. (1997). A survey of corporate governance. Journal of Finance, 52(2), 737–783.

    Article  Google Scholar 

  • Shyu, J. Z., Chiu, Y-C, & Yuo, C. C. (2001). A Cross-national comparative analysis of innovation policy in the integrated circuit industry. Technology in Society, 23(2), 227–240.

    Article  Google Scholar 

  • Smyth, R. (2000). Should China be promoting large-scale enterprises and enterprise groups. World Development, 28(4), 721–737.

    Article  Google Scholar 

  • Streeck, W., & Schmitter, P. C. (1985). Community, Market, State and associations? The prospective contribution of interest governance to social order. In W. Streeck, & P. C. Schmitter (Eds.), Private interest government: beyond market and state (pp. 1–29). Beverly Hills: Sage.

    Google Scholar 

  • Tan, J., & Litschert, R. J. (1994). Environment–strategy relationship and its performance implications: An empirical study of Chinese electronics industry. Strategic Management Journal, 15(1), 1–20.

    Google Scholar 

  • Tan, J. (2001). Innovation and risk-taking in a transitional economy: A comparative study of Chinese managers and entrepreneurs. Journal of Business Venturing, 16(4), 359–376.

    Article  Google Scholar 

  • Trigeorgis, L. (1996). Real options: Managerial flexibility and strategy in resource allocation. Cambridge, MA: MIT Press.

    Google Scholar 

  • Wegloop, P. (1995). Linking firm’s strategy and government action: Towards a resource-based perspective on innovation and technology policy. Technology in Society, 17(4), 413–428.

    Article  Google Scholar 

  • Xue, L. (1997). A historical perspective of China’s innovation system reform: A case study. Journal of Engineering and Technology Management, 14(1), 67–81.

    Article  Google Scholar 

  • Young, M. N., Ahlstrom, D., Bruton, G. D., & Chan, E. S. (2001). The resource dependence, service and control functions of boards of directors in Hong Kong and Taiwanese firms. Asian Pacific Journal of Management, 18(2), 223–244.

    Article  Google Scholar 

Download references

Acknowledgments

The Natural Science Fund of China (NNSC: 79925004, 70271026) provided financial support for this study. We thank Mingfang Li and George Farris for their insightful comments and suggestions.

Author information

Authors and Affiliations

  1. School of Management, Xi’an Jiaotong University, Xi’an, 710049, Shaanxi, PR China

    Yuan Li & Feng Ren

  2. Department of Marketing, Xi’an Jiaotong University, Xi’an, 710049, Shaanxi, PR China

    Yi Liu

Authors
  1. Yuan Li
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Yi Liu
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Feng Ren
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Yuan Li.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Li, Y., Liu, Y. & Ren, F. Product innovation and process innovation in SOEs: evidence from the Chinese transition. J Technol Transfer 32, 63–85 (2007). https://doi.org/10.1007/s10961-006-9009-8

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10961-006-9009-8

Keywords

JEL Classifications

Search

Navigation