Approaching the technological innovation frontier: evidence from Chinese SOEs

Abstract

This paper studies how large State-owned enterprises (SOEs) in China are approaching the technological innovation frontier and contributes to the literature on technological catching up and leapfrogging by identifying three models or strategies of approaching the innovation frontier. In addition to the well-recognised technology transfer based strategy, pursuing emerging technologies and reinventing mature technology could also be effective, with reinventing mature technology as the most important strategy. The paper also finds that strong internal R&D capability, rather than manufacturing capability as suggested by the extant literature, is the basis of all three models. This also implies that making big organisational transformations such as changing a technology transfer centred R&D function to a proprietary technology development centred R&D function, changing a manufacturing centred culture to an innovation centred culture, and reshaping the innovation network, is an important precondition to approach the innovation frontier.