Hostname: page-component-745bb68f8f-hvd4g Total loading time: 0 Render date: 2025-01-12T14:55:03.780Z Has data issue: false hasContentIssue false
  • English
  • Français

Does open innovation apply to China? Exploring the contingent role of external knowledge sources and internal absorptive capacity in Chinese large firms and SMEs

Published online by Cambridge University Press:  11 March 2015

Fang Huang ,
John Rice  and
Nigel Martin
Fang Huang
Affiliation:
School of Management and Governance, Murdoch University, Perth, Australia
John Rice*
Affiliation:
UNE Business School, University of New England, Armidale, NSW
Nigel Martin
Affiliation:
College of Business and Economics, The Australian National University, Canberra, Australian Capital Territory, Australia
*
Corresponding author: jrice6@une.edu.au
Get access Rights & Permissions [Opens in a new window]

Abstract

While ‘open innovation’ is often considered to be an organisational strategy with universal application, its generalisability and applicability to organisations operating within emerging economies has yet to be fully explored. This study provides empirical evidence of its importance within a substantial sample of Chinese large firms and small and medium enterprises. Using Tobit regression analysis, our findings indicate that external knowledge sources from inter-firm networking are more important in creating the benefits of open innovation for Chinese small and medium enterprises than their larger peers. Linkages to university and research institutes generally have few direct effects on the innovation performance of both large and small firms in China. However, the role of universities and research institutes is shown to be important among our large firm sample when combined with evident internal absorptive capacity. This interaction is generally limited to our large firm sample, and is not as evident among small firms.

Our study indicates that the barriers to the adoption of open innovation by Chinese firms might be largely related to the comparatively weak domestic research expertise and limited organisational absorptive capabilities, with this most particularly evident for small and medium enterprises.

These findings suggest that, based on this evidence, there is no need for emerging economies like China to mimic the emergence path from closed to open innovation followed by developed countries. Chinese firms will be more likely to garner the benefits available from openness when they develop the capabilities required to identify, assimilate and commercialise knowledge and technologies obtained from external sources.

Keywords

open innovationChinaknowledge sourcesabsorptive capacitylarge firmsSMEs
Type
Research Article
Information
Journal of Management & Organization , Volume 21 , Issue 5 , September 2015 , pp. 594 - 613
Copyright
Copyright © Cambridge University Press and Australian and New Zealand Academy of Management 2015 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Ahuja, G. (2000). The duality of collaboration: Inducements and opportunities in the formation of interfirm linkages. Strategic Management Journal, 21(33), 317–343.3.0.CO;2-B>CrossRefGoogle Scholar
Alvarez, S. A., & Barney, J. B. (2002). Wasps and tarantulas: alliances between entrepreneurial firms and large firms. Working paper, Fisher College of Business, Ohio State University.Google Scholar
Ayyagari, M., Beck, T., & Demirguc-Kunt, A. (2007). Small and medium enterprises across the globe. Small Business Economics, 29, 415–434.Google Scholar
Bierly, P. E. III, & Daly, P. S. (2007). Sources of external organisational learning in small manufacturing firms. International Journal of Technology Management, 38(1–2), 45–68.Google Scholar
Bin, G. (2008). Technology acquisition channels and industry performance: An industry-level analysis of Chinese large- and medium-size manufacturing enterprises. Research Policy, 37(2), 194–209.Google Scholar
Boer, H., Caffyn, S., Corso, M., Coughlan, P., Gieskes, J., Magnusson, M., Pavesi, S., & Ronchi, S. (2001). Knowledge and continuous innovation. International Journal of Operations & Production Management, 21(4), 490–503.CrossRefGoogle Scholar
Brehm, S., & Lundin, N. (2012). University–industry linkages and absorptive capacity: An empirical analysis of China’s manufacturing industry. Economics of Innovation and New Technology, 21(8), 837–852.CrossRefGoogle Scholar
Bucic, T., & Ngo, L. V. (2012). Examining drivers of collaborative inbound open innovation: Empirical evidence from Australian firms. International Journal of Innovation Management, 16(4), 1250017–1250024.Google Scholar
Chang, P. L., & Shih, H. Y. (2004). The innovation systems of Taiwan and China: A comparative analysis. Technovation, 24(7), 529–539.Google Scholar
Chaston, I., & Scott, G. J. (2012). Entrepreneurship and open innovation in an emerging economy. Management Decision, 50(7), 1161–1177.CrossRefGoogle Scholar
Chen, J. (2006). Development of Chinese small and medium-sized enterprises. Journal of Small Business and Enterprise Development, 13(2), 140–147.Google Scholar
Chen, Y. S., Lin, M. J. J., & Chang, C. H. (2009). The positive effects of relationship learning and absorptive capacity on innovation performance and competitive advantage in industrial markets. Industrial Marketing Management, 38(2), 152–158.Google Scholar
Chesbrough, H. (2003a). Open innovation: The new imperative for creating and profiting from technology. Boston, MA: Harvard Business School Press.Google Scholar
Chesbrough, H. (2003b). The era of open innovation. MIT Sloan Management Review, 44(3), 35–41.Google Scholar
Chesbrough, H. (2006). Open innovation: A new paradigm for understanding industrial innovation. In H. Chesbrough, W. Vanhaverbeke, & J. West (Eds.), Open innovation: Researching a new paradigm (pp. 1–14). Oxford: Oxford University Press.Google Scholar
Chesbrough, H., & Crowther, A. K. (2006). Beyond high tech: Early adopters of open innovation in other industries. R&D Management, 36, 229–236.Google Scholar
Chesbrough, H., & Rosenbloom, R. S. (2002). The role of the business model in capturing value from innovation: evidence from xerox corporation’s technology spin-off companies. Industrial and Corporate Change, 11(3), 529–555.Google Scholar
Christensen, J. F. (2006). Wither core competency for the large corporation in an open innovation world?. In H. Chesbrough, W. Vanhaverbeke, & J. West (Eds.), Open innovation: Researching a new paradigm (pp. 35–61). Oxford: Oxford University Press.Google Scholar
Christensen, J. F., Olesen, M. H., & Kjær, J. S. (2005). The industrial dynamics of open innovation – Evidence from the transformation of consumer electronics. Research Policy, 34(10), 1533–1549.Google Scholar
Cohen, W. M., & Levinthal, D. A. (1990). Absorptive capacity: A new perspective on learning and innovation. Administrative Science Quarterly, 35(1), 128–152.Google Scholar
Creplet, F., Dupouet, O., Kern, F., Mehmanpazir, B., & Munier, F. (2001). Consultants and experts in management consulting firms. Research Policy, 30(9), 1517–1535.Google Scholar
DeSanctis, G., Glass, J. T., & Ensing, I. M. (2002). Organizational designs for R&D. Academy of Management Executive, 16(3), 55–66.Google Scholar
Dobson, W., & Safarian, A. E. (2008). The transition from imitation to innovation: An enquiry into China’s evolving institutions and firm capabilities. Journal of Asian Economics, 19(4), 301–311.Google Scholar
Dodgson, M., Gann, D., & Salter, A. (2006). The role of technology in the shift towards open innovation: The case of procter & gamble. R&D Management, 36(3), 333–346.Google Scholar
Edler, J., Meyer-Krahmer, F., & Reger, G. (2002). Changes in the strategic management of technology: Results of a global benchmarking study. R&D Management, 32(2), 149–164.Google Scholar
Fabrizio, K. R. (2006). The use of university research in firm innovation. In H. Chesbrough, W. Vanhaverbeke, & J. West (Eds.), Open Innovation: Researching a New Paradigm (pp. 134–160). Oxford: Oxford University Press.Google Scholar
Faems, D., Van Looy, B., & Debackere, K. (2005). Inter-organizational collaboration and innovation: Toward a portfolio approach. Journal of Product Innovation Management, 22(3), 238–250.Google Scholar
Fu, P. P., Tsui, A. S., & Dess, G. G. (2006). The dynamics of guanxi in Chinese high-tech firms: Implications for knowledge management and decision making. Management International Review, 46(3), 277–305.Google Scholar
Fu, X. (2008). Foreign direct investment, absorptive capacity and regional innovation capabilities: Evidence from China. Oxford Development Studies, 36(1), 89–110.CrossRefGoogle Scholar
Fu, X., & Xiong, H. (2011). Open innovation in China: Policies and practices. Journal of Science and Technology Policy in China, 2(3), 196–218.Google Scholar
Gao, S., Xu, K., & Yang, J. (2008). Managerial ties, absorptive capacity, and innovation. Asia Pacific Journal of Management, 25(3), 395–412.Google Scholar
Grandori, A. (1997). An organizational assessment of interfirm coordination modes. Organization Studies, 18(16), 897–925.Google Scholar
Granstrand, O., & Oskarsson, C. (1994). Technology diversification in ‘MUL-TECH’ corporations. IEEE Transactions on Engineering Management, 41(4), 355–364.Google Scholar
Gu, S. (1999). China’s industrial technology: Market reform and organizational change. London: Routledge.Google Scholar
Guan, J. C., Yam, R. C. M., & Mok, C. K. (2005). Collaboration between industry and research institutes/universities on industrial innovation in Beijing, China. Technology Analysis & Strategic Management, 17(3), 339–353.Google Scholar
Hagedoorn, J., & Duysters, G. (2002). External sources of innovative capabilities: The preference for strategic alliances or mergers and acquisitions. Journal of Management Studies, 39(2), 167–188.Google Scholar
Harris, R. J. (2009). Improving tacit knowledge transfer within SMEs through e-collaboration. Journal of European Industrial Training, 33(3), 215–231.Google Scholar
Hu, A. G. Z., Jefferson, G. H., & Qian, J. C. (2005). R&D and technology transfer: Firm-level evidence from Chinese industry. The Review of Economics and Statistics, 87(4), 780–786.CrossRefGoogle Scholar
Huang, F., & Rice, J. (2009). The role of absorptive capacity in facilitating “open innovation’ outcomes: A study of Australian SMEs in the manufacturing sector. International Journal of Innovation Management, 13(2), 201–220.Google Scholar
Huang, F., & Rice, J. (2012). Firm networking and bribery in China: Assessing some potential negative consequences of firm openness. Journal of Business Ethics, 107(4), 533–545.Google Scholar
Huizingh, E. K. R. E. (2011). Open innovation: State of the art and future perspectives. Technovation, 31(1), 2–9.CrossRefGoogle Scholar
Human, S. E., & Provan, K. G. (1996). External resource exchange and perceptions of competitiveness within organizational networks: An organizational learning perspective. Frontiers for Entrepreneurship Research, 45(2), 327–669.Google Scholar
Jefferson, G., Hu, A. G. Z., Guan, X., & Yu, X. (2003). Ownership, performance and innovation in China’s large- and medium-sized industrial enterprise sector. China Economic Review, 14(1), 89–113.Google Scholar
Kafouros, M. I., & Forsans, N. (2012). The role of open innovation in emerging economies: Do companies profit from the scientific knowledge of others? Journal of World Business, 47(3), 362–370.Google Scholar
Katila, R., & Ahuja, G. (2002). Something old, something new: A longitudinal study of search behavior and new product introduction. Academy of Management Journal, 45(8), 1183–1194.Google Scholar
Lai, H. C., Chiu, Y. C., & Leu, H. D. (2005). Innovation capacity comparison of China’s information technology industrial clusters: The case of Shanghai, Kunshan, Shenzhen and Dongguan. Technology Analysis & Strategic Management, 17(3), 293–315.Google Scholar
Lane, P. J., Koka, B. R., & Pathak, S. (2006). The reification of absorptive capacity: A critical review and rejuvenation of the construct. Academy of Management Review, 31(4), 833–863.Google Scholar
Laursen, K., & Salter, A. (2006). Open for innovation: The role of openness in explaining innovation performance among U.K. manufacturing firms. Strategic Management Journal, 27(2), 131–150.CrossRefGoogle Scholar
Lee, S., Park, G., Yoon, B., & Park, J. (2010). Open innovation in SMEs – An intermediated network model. Research Policy, 39(2), 290–300.CrossRefGoogle Scholar
Leiponen, A., & Helfat, C. E. (2010). Innovation objectives, knowledge sources, and the benefits of breadth. Strategic Management Journal, 31(2), 224–236.Google Scholar
Li, X. (2009). China’s regional innovation capacity in transition: An empirical approach. Research Policy, 38(2), 338–357.CrossRefGoogle Scholar
Lichtenthaler, U., & Lichtenthaler, E. (2009). A capability-based framework for open innovation: Complementing absorptive capacity. Journal of Management Studies, 46(8), 1315–1338.Google Scholar
Liao, T.-S., Rice, J., & Lu, J.-C. (2014). The vicissitudes of competitive advantage: Empirical evidence from Australian manufacturing SMEs. Journal of Small Business Management, doi:10.1111/jsbm.12078.Google Scholar
Liu, X., & Lundin, N. (2008). Toward a market-based open system of innovation in China. In R. Meckl, R. Mu, & F. Meng (Eds.), Technology and innovation management: Theories, methods and practices from Germany and China (pp. 17–40). München, Wien: Oldenbourg.Google Scholar
Liu, X., & While, S. (1997). The relative contributions of foreign technology and domestic inputs to innovation in Chinese manufacturing industries. Technovation, 17(3), 119–125.Google Scholar
Liu, X., & White, R. S. (1997). The relative contributions of foreign technology and domestic inputs to innovation in Chinese manufacturing industries. Technovation, 17(3), 119–125.Google Scholar
Liu, X., & White, S. (2001). Comparing innovation systems: A framework and application to China’s transitional context. Research Policy, 30(7), 1091–1114.Google Scholar
Lundin, N., Sjöholm, F., & Qian, J. C. (2006). The role of small firms in China’s technology development. EIJS Working Paper Series No. 227, Stockholm, Sweden: EIJS.Google Scholar
McAdam, R., Moffett, S., & Peng, J. (2012). Knowledge sharing in Chinese service organizations: A multi case cultural perspective. Journal of Knowledge Management, 16(1), 129–147.Google Scholar
McKenna, R. (2000). Free advice: Consulting the silicon valley way. In C. M. Lee, W. Miller, M. G. Hancock, & H. Rowen (Eds.), The silicon valley edge (pp. 370–379). Stanford: Stanford University Press.Google Scholar
Motohashi, K., & Yun, X. (2007). China’s innovation system reform and growing industry and science linkages. Research Policy, 36(8), 1251–1260.Google Scholar
Negassi, S. (2004). R&D co-operation and innovation: A microeconometric study on french firms. Research Policy, 33(3), 365–384.Google Scholar
Ngah, R., & Jusoff, K. (2009). Tacit knowledge sharing and SMEs’ organizational performance. International Journal of Economics and Finance, 1(1), 216–220.Google Scholar
Nieto, M. J., & Santamaria, L. (2007). The importance of diverse collaborative networks for the novelty of product innovation. Technovation, 27(6–7), 367–377.Google Scholar
Oakey, R., During, W., & Kauser, S. (Eds.) (2001). New technology-based firms in the new millennium. Oxford: Elsevier.Google Scholar
Park, S. H., & Luo, Y. (2001). Guanxi and organizational dynamics: Organizational networking in Chinese firms. Strategic Management Journal, 22(5), 455–477.CrossRefGoogle Scholar
Perkmann, M., & Walsh, K. (2007). University-industry relationships and open innovation: Towards a research agenda. International Journal of Management Reviews, 9(4), 259–280.Google Scholar
Phan, P., Zhou, J., & Abrahamson, E. (2010). Creativity, innovation, and entrepreneurship in China. Management and Organization Review, 6(2), 175–194.Google Scholar
Porter, M. E., & Ketels, C. H. M. (2003). UK competitiveness: Moving to the next stage. DTI Economics Paper No. 3, London, UK: DTI.Google Scholar
Quintas, P., Wield, D., & Massey, D. (1992). Academic-industry links and innovation: Questioning the science park model. Technovation, 12(3), 161–175.Google Scholar
Rice, J., Liao, T., Martin, N., & Galvin, P. (2012). The role of strategic alliances in complementing firm capabilities. Journal of Management and Organization, 18(6), 858–869.Google Scholar
Salge, T.O., Bohné, T. M., Farchi, T., & Piening, E. P. (2012). Harnessing the value of open innovation: The moderating role of innovation management. International Journal of Innovation Management, 16(3), 1240005–1240026.Google Scholar
Savitskaya, I., Salmi, P., & Torkkeli, M. (2010). Barriers to open Innovation: Case China. Journal of Technology Management & Innovation, 5(4), 10–21.Google Scholar
Shaw, B. (1998). Innovation and new product development in the UK medical equipment industry. International Journal of Technology Management, 15(3–5), 433–445.Google Scholar
Schmidt, S. (2009). Measuring absorptive capacity. In proceedings of the 6th International Conference on Intellectual Capital, Knowledge Management & Organizational Learning, 254–260. Montreal, Canada: McGill University.Google Scholar
Simard, C., & West, J. (2006). Knowledge network and geographic locus of innovation. In H. Chesbrough, W. Vanhaverbeke, & J. West (Eds.), Open innovation: Researching a new paradigm (pp. 220–240). Oxford: Oxford University Press.Google Scholar
Smith, W., & Hallward-Driemeier, M. (2005). Understanding the investment climate. Finance and De velopment , 42(1), 40–43.Google Scholar
Spithoven, A., Clarysse, B., & Knockaert, M. (2011). Building absorptive capacity to organise inbound open innovation in traditional industries. Technovation, 31, 10–21.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.Google Scholar
Tan, Z., & Ouyang, W. (2004). Diffusion and impacts of the internet and e-commerce in China. Electronic Markets, 14(1), 25–35.Google Scholar
Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509–533.Google Scholar
The World Bank (2005). World Development Report 2005: A better investment climate for everyone. Washington, DC, USA: World Bank and Oxford University Press.Google Scholar
The World Bank (2006). China – Investment Climate Survey 2003, Enterprise Surveys (http://www.enterprisesurveys.org).Google Scholar
Tsai, W. (2001). Knowledge transfer in intraorganizational networks: Effects of network position and absorptive capacity on business unit innovation and performance. Academy of Management Journal, 44(5), 996–1004.CrossRefGoogle Scholar
Tsui, A. S., & Farh, J. L. (1997). Where guanxi matters: Relational demography and guanxi in the Chinese context. Work and Occupations, 24(1), 56–79.Google Scholar
Tushman, M. L. (2004). From engineering management/R&D management, to the management of innovation, to exploiting and exploring over value nets: 50 years of research initiated by the IEEE-TEM. IEEE Transactions on Engineering Management, 51(4), 409–411.Google Scholar
Un, C.A., Cuervo-Cazurra, A., & Asakawa, K. (2008). R&D collaborations and product innovation. Journal of Product Innovation Management, 27(5), 673–689.Google Scholar
van de Vrande, V., de Jong, J. P. J., Vanhaverbeke, W., & de Rochemont, M. (2009). Open innovation in SMEs: Trends, motives and management challenges. Technovation, 29(6–7), 423–437.Google Scholar
van de Vrande, V., Vanhaverbeke, W., & Gassmann, O. (2010). Broadening the scope of open innovation: Past research, current state and future directions. International Journal of Technology Management, 52(3/4), 221–235.Google Scholar
Vanhaverbeke, W. (2006). The inter-organizational context of open innovation. In H. Chesbrough, W. Vanhaverbeke, & J. West (Eds.), Open innovation: Researching a new paradigm (pp. 205–219). Oxford: Oxford University Press.Google Scholar
Vanhaverbeke, W., & Cloodt, M. (2006). Open innovation in value networks. In H. Chesbrough, W. Vanhaverbeke, & J. West (Eds.), Open innovation: Researching a new paradigm (pp. 258–284). Oxford: Oxford University Press.Google Scholar
Veugelers, R. (1997). Internal R&D expenditures and external technology sourcing. Research Policy, 26(3), 303–316.Google Scholar
Volberda, H. W., Foss, N. J., & Lyles, M. A. (2010). Absorbing the concept of absorptive capacity: How to realize its potential in the organization field. Organization Science, 21(4), 931–951.Google Scholar
Wagner, S.M. (2013). Partners for business-to-business service innovation. IEEE Transactions on Engineering Management, 60(1), 113–123.Google Scholar
West, J., & Gallagher, S. (2006). Challenges of open innovation: The paradox of firm investment in open-source software. R&D Management, 36(3), 319–331.Google Scholar
Xin, K. R., & Pearce, J. L. (1996). Guanxi: Connections as substitutes for formal institutional support. Academy of Management Journal, 39(6), 1641–1658.Google Scholar
Zander, U., & Kogut, B. (1995). Knowledge and the speed of the transfer and imitation of organizational capabilities: An empirical test. Organization Science, 6(1), 76–92.Google Scholar
Zheng, Y., & Sheng, S. (2006). Learning in local cluster in the context of global value chain: A case study of the Yunhe wood toy cluster in Zhejing, China. Innovation: Management, Policy & Practice, 8(1–2), 120–127.Google Scholar
Zott, C. (2003). Dynamic capabilities and the emergence of intra-industry differential firm performance: Insights from a simulation study. Strategic Management Journal, 24(2), 97–125.Google Scholar