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How Do Chinese Firms Manage Innovation? A Perspective of Dynamic Capabilities
Wei Zhao


Combining the literature on technological catch-up, innovation management and dynamic capabilities, this paper identifies the major problem when firms from developing economies manage the process of innovation when they are approaching the technological frontier. Illuminated by an array of empirical cases of Chinese firms from multiple industries, we find that their common weakness of managing innovation is often the lack of integrating and articulating simultaneously technological change, market change and organizational change in a dynamic way, i.e., a kind of “dynamic capabilities” of management at strategic level. For years Chinese industrial firms have accumulated technological capabilities through different modes (technology transfer, indigenous R&D, and foreign technology acquisition, etc.) and different relationship with customers in the market, now they have to improve the quality of innovation management if they seek to produce significant innovation outcome and compete with the innovative firms from the advanced economies. The findings contribute to research and management practice on how catch-up firms in developing countries can transform themselves from imitators or followers to innovators.