The determinants of the choice of innovation source for Chinese firms

Abstract

Various factors affect a firm’s choice of sources of product innovation. Understanding these factors is important for firms to be able to choose sources of innovation based upon their specific conditions. Earlier research has identified many of these factors, mainly by focusing on the internal factors of firms in developed countries. However, there is still a lack of empirical studies of external factors, especially in terms of the relationship between different factors and the choice of sources of innovation in developing countries. This paper examines the determinants of the choice of innovation source for Chinese firms. Based on a combination of participatory studies, interviews and a survey of more than 400 firms in China, it finds that the innovative ideas of other firms are still the most frequently used source of innovation for Chinese enterprises. The links between a firm’s choice and its market environment, industry technological opportunities, firm size and R&D intensity are also identified.