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Product Innovations in Emerging Economies: The Role of Foreign Knowledge Access Channels and Internal Efforts in Chinese Firms

Published online by Cambridge University Press:  02 February 2015

Jing Li ,
Dong Chen  and
Daniel M. Shapiro
Jing Li
Affiliation:
Simon Fraser University, Canada
Dong Chen
Affiliation:
Peking University, China
Daniel M. Shapiro
Affiliation:
Simon Fraser University, Canada
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Abstract

In this paper, we theoretically and empirically investigate factors that contribute to product innovation by firms in emerging markets. Combining the innovation literature with the latecomer literature on ‘catch-up’ strategies of firms in newly industrialized economies, we posit that access to foreign knowledge is essential for fostering product innovation. In particular, we investigate how innovation clusters formed by inward foreign direct investments in an emerging market and export activities of a firm are effective channels for acquiring foreign knowledge. We also suggest firms that invest in research and development and marketing activities benefit further from access to foreign knowledge due to increased absorptive capacity. Empirically, we employ information on over 160,000 indigenous manufacturing firms in China in 2005–2006. We find strong empirical support for our theoretical framework and conclude by discussing the implications for both theory and managerial practice.

Keywords

Chinaclusterslearning by exportingmarketingproduct innovationresearch and development (R&D)产品创新集群出口学习研发市场营销中国
Type
Articles
Information
Management and Organization Review , Volume 6 , Issue 2 , July 2010 , pp. 243 - 266
Copyright
Copyright © International Association for Chinese Management Research 2010

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