The Ideal Path to Technological Ascent of Developing Firms in China – Interactions between Institutions, Firm Characteristics and Technological Strategies A thesis submitted to the University of Manchester for the degree of Doctor of Philosophy in the Faculty of Humanities 2017 Michael R. Korn ALLIANCE MANCHESTER BUSINESS SCHOOL 0 Content Content ......................................................................................................................................... 1 List of Tables ................................................................................................................................. 4 List of Figures ................................................................................................................................ 5 List of Abbreviations ..................................................................................................................... 6 Abstract: The Ideal Path to Technological Ascent of Developing Firms in China – Interactions between Institutions, Firm Characteristics and Technological Strategies .................................... 7 Declaration .................................................................................................................................... 8 Copyright Statement ..................................................................................................................... 9 Acknowledgments ....................................................................................................................... 10 1. Introduction ............................................................................................................................ 11 1.1 Background to the Thesis .................................................................................................. 11 1.2 The Research Questions .................................................................................................... 15 1.3 The Structure of the Thesis ............................................................................................... 15 2. General Literature Review ..................................................................................................... 19 2.1 Purpose of Chapter ........................................................................................................... 19 2.2 National Institutions and their influence on Firm characteristics .................................... 21 2.2.1 The State – Why is state important for firms technology strategy and capabilities? 22 2.2.2 The Financial System – Why is financial system important for firms technology strategy and capabilities? ................................................................................................... 24 2.2.3 The Skill Development System – Why is skill development important for firms technology strategy and capabilities? ................................................................................ 26 2.2.4 The Authority and Trust System – Why is authority and trust important for firms technology strategy and capabilities? ................................................................................ 28 2.3 Characteristics of Firms ..................................................................................................... 32 2.4 Technology Strategies for Firms in Developing Economies .............................................. 37 2.4.1 Dependent Strategy ................................................................................................... 39 2.4.2 Imitative Strategy ....................................................................................................... 41 2.4.3 Defensive Strategy ..................................................................................................... 43 2.4.4 Offensive Strategy ...................................................................................................... 44 2.5 Organisational Capabilities ............................................................................................... 46 2.6 The Ideal Path for Technological Ascent of Developing Firms .......................................... 49 2.7 Chapter Summary ............................................................................................................. 54 3. China Focused Literature Review ............................................................................................ 56 3.1 Purpose of Chapter ........................................................................................................... 57 1 3.2 National Institutions in China ............................................................................................ 57 3.2.1 The State .................................................................................................................... 58 3.2.2 The Financial System .................................................................................................. 60 3.2.3 The Skill Development System ................................................................................... 62 3.2.4 The Authority and Trust System ................................................................................ 65 3.3 Characteristics of Chinese Firms ....................................................................................... 68 3.4 Technology Strategies in China ......................................................................................... 74 3.5 The Chinese Ideal Path for Technological Ascent ............................................................. 82 3.6 Chapter Summary ............................................................................................................. 85 4. Research Methodology ........................................................................................................... 88 4.1 Purpose of Chapter ........................................................................................................... 88 4.2 Research Design ................................................................................................................ 88 4.3 Sample ............................................................................................................................... 90 4.4 Data Collection .................................................................................................................. 93 4.5 Data Analysis ................................................................................................................... 103 4.6 Chapter Summary ........................................................................................................... 105 5. Empirical Findings ................................................................................................................. 106 5.1 Purpose of Chapter ......................................................................................................... 106 5.2 Zhuzhou Times New Material Technology ...................................................................... 107 5.2.1 Zhuzhou Times New Material Technology Background and History ....................... 108 5.2.2 Zhuzhou Times New Material Technology – Ownership Structure ......................... 109 5.2.3 Zhuzhou Times New Material Technology Governance Structure .......................... 111 5.2.4 Zhuzhou Times New Material Technology Performance Indicators ........................ 115 5.2.5 Zhuzhou Times New Material – Development Period I from 1989 onwards .......... 120 5.2.6 Zhuzhou Times New Material Technology – Development Period II from 1994 onwards ............................................................................................................................ 129 5.2.7 Zhuzhou Times New Material Technology – Development Period III from 2001 onwards ............................................................................................................................ 141 5.3 Huawei Technologies Co. Ltd. ......................................................................................... 160 5.3.1 Huawei Technologies – Background and History ..................................................... 161 5.3.2 Huawei Technologies – Ownership Structure .......................................................... 163 5.3.3 Huawei Technologies – Governance Structure ........................................................ 168 5.3.4 Huawei Technologies – Performance Indicators ..................................................... 171 5.3.5 Huawei Technologies – Development Period I from 1987 onwards ....................... 177 5.3.6 Huawei Technologies – Development Period II from 1992 onwards ...................... 188 5.3.7 Huawei Technologies – Development Period III from 2001 onwards ..................... 204 2 6. Discussion .............................................................................................................................. 221 6.1 Purpose of Chapter ......................................................................................................... 221 6.2 National Institutions and Domestic Developing Firms – Variations in Interaction ......... 223 6.2.1 Differentiation by Ownership: Implications on Financial, Organisational, and Innovative Capabilities ...................................................................................................... 226 6.2.2 Differentiation by Size: Implications on Financial, Organisational, and Innovative Capabilities .......................................................................................................................