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Catching‐up through staged development and innovation The case of Chinese telecom companies

Catching‐up through staged development and innovation The case of Chinese telecom companies Purpose – The purpose of this paper is to provide a conceptual framework of staged development that examines strategies of domestic companies, government policies, and impacts of foreign multinational companies (MNCs) at different periods of catch‐up of latecomers. Design/methodology/approach – A multi‐case approach is employed to examine four domestic telecom‐equipment companies that have significant impact on China's telecom‐equipment industry. They are: Huawei Technology Corporation (Huawei), Shenzhen Zhongxin Technology Corporation (ZTE), Datang Telecom Technology Corporation, Ltd (Datang), and Great Dragon Information Technology (GDT). Findings – This paper identifies four distinct stages of the catching‐up process, featuring different institutional environment, government involvement, and the ensuing actions of foreign MNCs and domestic companies. During the initial stage, China's government decision of directly leapfrogging to the most advanced switch equipment had a profound impact, because it led to both heavy reliance on foreign MNCs and the pursuance of switch research and development (R&D) by domestic research institutes and new technology companies. The dominance of foreign MNCs is challenged during the growth stage, because several domestic companies ascended and gained the capability to produce large‐scale, stored program controls and the government directly leveraged support in R&D, marketing, and finance. Although many uncompetitive domestic companies failed during the filtration stage, the management training received from foreign MNCs and newly available financing options provided necessary resources for some domestic companies to survive and expand. Domestic leaders globalized their marketing, production, and R&D functions and to become MNCs themselves in the globalization stage, thus finalizing the catching‐up. Social implications – The Chinese experiences shed light on late‐industrialization for other developing economies by suggesting that to catch‐up in high‐tech industries, government can become involved strategically to form a competitive and efficient market environment for innovation. Originality/value – The paper proposes a new conceptual framework to analyze catching‐up of domestic companies as latecomers. This framework can be used to study catching‐up in other sectors in late‐industrializing countries. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Science and Technology Policy in China Emerald Publishing

Catching‐up through staged development and innovation The case of Chinese telecom companies

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Publisher
Emerald Publishing
Copyright
Copyright © 2010 Emerald Group Publishing Limited. All rights reserved.
ISSN
1758-552X
DOI
10.1108/17585521011032559
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to provide a conceptual framework of staged development that examines strategies of domestic companies, government policies, and impacts of foreign multinational companies (MNCs) at different periods of catch‐up of latecomers. Design/methodology/approach – A multi‐case approach is employed to examine four domestic telecom‐equipment companies that have significant impact on China's telecom‐equipment industry. They are: Huawei Technology Corporation (Huawei), Shenzhen Zhongxin Technology Corporation (ZTE), Datang Telecom Technology Corporation, Ltd (Datang), and Great Dragon Information Technology (GDT). Findings – This paper identifies four distinct stages of the catching‐up process, featuring different institutional environment, government involvement, and the ensuing actions of foreign MNCs and domestic companies. During the initial stage, China's government decision of directly leapfrogging to the most advanced switch equipment had a profound impact, because it led to both heavy reliance on foreign MNCs and the pursuance of switch research and development (R&D) by domestic research institutes and new technology companies. The dominance of foreign MNCs is challenged during the growth stage, because several domestic companies ascended and gained the capability to produce large‐scale, stored program controls and the government directly leveraged support in R&D, marketing, and finance. Although many uncompetitive domestic companies failed during the filtration stage, the management training received from foreign MNCs and newly available financing options provided necessary resources for some domestic companies to survive and expand. Domestic leaders globalized their marketing, production, and R&D functions and to become MNCs themselves in the globalization stage, thus finalizing the catching‐up. Social implications – The Chinese experiences shed light on late‐industrialization for other developing economies by suggesting that to catch‐up in high‐tech industries, government can become involved strategically to form a competitive and efficient market environment for innovation. Originality/value – The paper proposes a new conceptual framework to analyze catching‐up of domestic companies as latecomers. This framework can be used to study catching‐up in other sectors in late‐industrializing countries.

Journal

Journal of Science and Technology Policy in ChinaEmerald Publishing

Published: Feb 26, 2010

Keywords: Developing countries; Newly industrialized economies; Telecommunication equipment; Government policy; Multinational companies; China

References