Capability sequencing: strategies
by township and village
enterprises in China
Lee Li
School of Administrative Studies,
Atkinson Faculty of Liberal and Professional Studies, York University,
Toronto, Ontario, Canada
Gongming Qian
Department of Management, The Chinese University of Hong Kong,
Hong Kong, and
Peggy Ng
School of Administrative Studies,
Atkinson Faculty of Liberal and Professional Studies, York University,
Toronto, Ontario, Canada
Abstract
Purpose – This study aims to identify and assess the strategies of township and village enterprises
in China to capture competitive advantages.
Design/methodology/approach – The paper employs a self-administered questionnaire survey
approach, involving a sample of managing directors of township and village enterprises in the Fujian
Province, China.
Findings – The analysis identifies the causal linkages across time between firms’ different
capabilities. Labor-intensive industries and rural locations offer township and village enterprises
(TVEs) opportunities to create capabilities to minimize costs. The cost minimization and systematic
learning capabilities, in turn, lead to low-priced innovator positioning. It also suggests that the
co-evolution and co-existence of different capabilities contribute to capability inimitability.
Research limitations/implications – Future studies on Chinese TVEs should expand the
empirical database and include TVEs in underdeveloped areas and to investigate how firms survive
within severe resource limitations.
Practical implications – The findings of this study indicate that dynamic capabilities are
important not only for firms in rapidly changing environments, but also for those in relatively stable
industries, such as labor-intensive industries. Firms should develop different capabilities over time
and combine these into complex capabilities bundles.
Originality/value – The findings from this study indicate that firms in developing countries can
achieve cost leadership and differentiation, but the route to the destination has a path-dependent
history.
Keywords Management strategy, Small enterprises, Questionnaire, China
Paper type Research paper
Introduction
In the last ten years, the success of township and village enterprises (TVEs) in China has
contributed substantially to the country’s fast economic growth. The total industrial
output of TVEs has surpassed that of state-owned firms to become the dominant output
The current issue and full text archive of this journal is available at
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Capability
sequencing
185
Journal of Small Business and
Enterprise Development
Vol. 13 No. 2, 2006
pp. 185-197
q Emerald Group Publishing Limited
1462-6004
DOI 10.1108/14626000610665890