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ABSTRACT
China’s ‘Market for Technology’ policy has attracted much interest over the past decade. In light of a relative emphasis on the spillover effects of joint ventures, this study examines the transferring effects of Multinationals’ (MNCs) outbound open innovation in such a context. A survey of 2071 research and development (R&D) contract transactions between Chinese entities and MNCs indicates both internal factors (e.g. organisational capabilities) and external factors (e.g. the role of Intellectual Property protection) affect the transferring effects, which reformulate the focus of the Policy from the relational dimension of ‘Government vs. MNCs’ to the transactional dimension of ‘Domestic entities vs. MNCs’. We thus conclude that MNCs’ active initiative in the involvement of technology transfer and the success of domestic transaction partners combine to contribute to the technology progress within China’s ‘Market for Technology’ policy.
Acknowledgements
The authors thank the anonymous reviewers and the Editor-in-Chief for their helpful comments and suggestions, the authors are also indebted to Professor Marzenna Anna Weresa, at Warsaw School of Economics for her support and guidance through the drafted paper's discussion in WERI Conference 2015.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes on contributors
Feihu Zheng is an associate Professor of international economics at Business school, Beijing Normal University, Beijing, China. His research interests include open Innovation in transition countries, R&D globalisation and MNCs’ strategy.
Hao Jiao is an associate Professor of management at Business School, Beijing Normal University, Beijing, China. His research interests include strategy, entrepreneurship management, innovation management and dynamic capabilities theory within the context of emerging markets, among others. He has published well over 70 articles in major refereed journals in strategy, entrepreneurship and innovation management such as the Academy of Management Perspectives, Journal of Product Innovation Management, Asia Pacific Journal of Management, Chinese Management Studies, Technological Forecasting & Social Change, Technology Analysis & Strategic Management, and Journal of Engineering and Technology Management, among others.
Hongbo Cai is an associate Professor of management at Business School, Beijing Normal University, Beijing, China. His research interests include International Trade, Labour Economics and Environmental Economics.
Notes
1. The Chinese government launched its open economy in 1995, but until 2001, after China joined the WTO, China's open economy was merely a normative institutional arrangement. The year 2006 not only saw the end of the transition period of WTO protection for China, but it also saw the start of the Chinese government's strategy of ‘innovative country’. Thus, the year 2006 was regarded as the dividing line between China's two different but closely related opening stages, ‘policy-orientated openness’ and ‘institutional openness’.
2. This mechanism is one of the mechanisms of outbound open innovation, which is also called formal collaboration, and requires a firm and its external partner to adhere to an agreed structure for the exchange (Laursen and Salter Citation2014).
3. This database comprises the entire first hand dataset. For those IT MNCs in Beijing, if they conduct R&D transactions with domestic entities and hope to obtain tax incentives for R&D, then they should register with BTMO for the necessary information disclosure including item, time, name of partners, amount, payment mode, IPR, and frequency, etc.
4. In line with different studies of outsourcing, we define outsourcing activities initiated by developed country firms (Clients) as ‘general outsourcing’, while those initiated by developing-country firms (Clients) are defined as ‘reversed outsourcing’.
5. Barki, Rivard, and Talbot (Citation1993) identify project size as a significant variable that characterises risk in a software project; thus, large projects pose greater risks and task uncertainty, which force MNCs to expend more time and energy to address the uncertainty. We hereby use the variable big project ratio to reveal the explorative capability of MNCs.
6. Compared with ‘R&D Tech.’ contracts, ‘Tech. consulting and Tech. service’ contracts need less asset specificity input, and the client faces less behavioural uncertainty; there are no items in the form of knowhow in transactions, and there are no items over 10 million RMB. It is for this reason why we test model 4 with only a few variables.