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Product Innovation in Chinese Manufacturing–1998-2007: Spillovers for Wholly Owned Firms vs. JVs

by Fan Xia, ESC Rennes School of Business

Monday, December 8, 2014 | 2:00pm-3:30pm | Room 335, HSBC Business School


A firm's type of owner is an important institutional variable in comparative research on countries with emerging markets. Here we test the influence of owner type on firm product innovation in Chinese manufacturing firms from 1998 to 2007. Building on the market transition and comparative capitalism literatures, we identify three owner types - state owned, privately held, and foreign owned – that vary widely in their governance practices and resource networks. We compare the regional spillover effects and receptivity of wholly owned firms and joint ventures among the three owner types. We speculate and find that spillovers vary by owner type and between wholly owned firms and types of joint venture. Further, we argue and find that spillover effects differ between private sector firms and the two other owner types, which do not differ. Finally, with regard to the receptivity to spillovers, we hypothesize and find that private sector firms benefit more from local spillovers than state or foreign firms. Our rationale for this proposition is that private sector firms have no formal ties within a bureaucracy and so have a higher percentage of weak ties in local search. We discuss the implications of these findings for the debates regarding firm ownership and innovation in emerging markets.