Technology transfer and innovation performance: Evidence from Chinese firms

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Abstract

This paper explores the relationship between technology transfer activities and innovation performance with special reference to Chinese industrial firms. It is based on a recent nationwide survey covering 2334 Chinese industrial firms. The impact of technology transfer on their innovative performance was analyzed for all the responded firms and similar analyses also addressed the issue from perspectives of general industrial firms versus high-tech firms, and large firms versus small and medium firms. Several critical types of technology transfer activities were identified and both positive and negative impacts were discussed along with the Pearson correlation analysis and stepwise regression analysis. The study revealed that the innovation activities in Chinese manufacturing firms could not be boosted substantially merely through the acquisition of key equipment and apparatus from abroad. The findings also suggested that Chinese firms should develop their technological absorptive capacity and transformative capacity, and foster technology transfer and communications among trading partners. Moreover, it would be crucial for Chinese firms to stress the nurturing of indigenous innovation capabilities so as to sustain their performance improvement.

Introduction

Technology is widely accepted as essential for improving the economy of a nation, especially in developing countries where industrial growth has occupied a very important role. Evidences across many countries, including both developed and developing ones, have shown there is an increasing appreciation that in the long term the ability to master technology and to manage and generate technological change is decisive in determining a country's international competitiveness and capacity to grow [1]. As world becomes increasingly interdependent, the firms in developing countries are also increasingly seeking global R&D partnerships and Science and Technology collaboration as a way to build their capacity, strengthen their core competencies and expand into technology fields that are considered critical for maintaining and developing market shares [2].

Technology transfer (TT) suggests the movement of technology from one place to another, for example, from one organization to another, from a university to an organization, or from one country to another [3]. It has been defined in a variety of ways as being product-embodied, process-embodied or personnel-embodied [4]. It can be a lengthy, complex and dynamic process and its success is influenced by various factors originating from many different sources [5], [6]. With special reference to developing countries, Hoffman and Girvan [7] suggested that TT needs to be perceived in terms of achieving three core objectives: the introduction of new techniques by means of investment of new plants; the improvement of existing techniques and the generation of new knowledge.

Technology acquisition from firms in more advanced countries is obviously important to firms in industrializing countries that are trying to catch up technologically [1]. Much of the technological effort in developing countries is directed at the acquisition of technological capabilities. Evidences have shown that industrial technology development in most developing countries means the ability to become more efficient and competitive in the use of imported technologies [8]. Western technology has become an effective vehicle to modernize Chinese industrial production, especially since the late 1970s when the economic reform and opening up policies were firstly implemented. Chen and Sun [9] mentioned three issues that have proved to be major concerns for both Chinese and Western researchers. First, the reason for Chinese enterprises to import technology; second, the effectiveness of the imported technology; and third, lessons from the process and further opportunity for technology transfer between overseas exporters and Chinese firms. As world markets, including the Chinese domestic market, have expanded and become more open, alliances between technology shareholders and shared users have become more important. Chen and Sun also reported that Chinese industrial enterprises have enlarged the scope of technology imported with a marked increase in the number of projects since the mid 1990s. This is partly because, since the early 1990s, more and more local companies and factories have purchased technology directly on their own initiative. This has greatly increased the amount of technology imported.

There is a flourishing research-based literature on the firm-specific factors that affect the innovation performance in advanced countries [1]. For example, Chandra and MacPherson [10] reported that most of the innovative companies exhibit above-average research and development expenditures, as well as strong and often complex links to external sources of innovation support. Importantly, many of these innovative firms have been developing technologically advanced products for both domestic and foreign markets [11]. However, there is little literature of equivalent scope and depth for developing countries on this theme [1]. Particularly, very little empirical studies are available on TT and innovation performance for developing countries. Lemoine and Uenal-Kesenci [12] discussed assembly trade and technology transfer of China and found that these outward-oriented and highly competitive industries, which are based on imported technology and foreign affiliates, seem to have had limited impact on local production and on the diffusion of technology in China's domestic industry. Their study focused on industry level and did not address TT and its impacts on innovation performance at firm level. Bruun and Bennett [13] discussed techno-economic security issues inherited in technology transfer from the Scandinavian and European perspective. Their study did not relate to impacts of TT on innovation performance in developing countries.

This paper presents some empirical findings from a nationwide study on the determinants of TT and its impacts on innovation performance in Chinese firms. A total of 2334 Chinese firms participated in the survey and replied the questionnaire. The processing of acquired data was done at the Beijing University of Aeronautics and Astronautics and City University of Hong Kong. The study addressed three research questions, including: 1) can technology transfer activities improve the innovation performance of Chinese firms? 2) which kinds of transferred technologies contribute most to their innovation performance? and 3) are cross-national or domestic transfers of technology dominating the improvement of their innovation performance? Based on the empirical findings of the study, this paper discusses the feasible guidance for the government to enact industry policies and for Chinese firms to foster technology transfer activities in the country.

Section snippets

Methodology

In this survey, technologies are classified into eight types according to the ethics and moralities of international technology trade with respect to two groups of technology providers and recipients. Both have three sub-groups including local, abroad and the HMT (i.e. Hong Kong, Macao, and Taiwan). In total, forty-eight TT variables (i.e. 8 × 2 × 3) for assessing innovation performance were identified as presented in Table 1. These independent variables were represented in terms of the number of

The empirical analysis of whole survey data

In order to test the proposed hypotheses, various statistical methods are employed for analyzing the survey data. Pearson correlation analysis of the entire survey data reveals that four variables correlate with the innovation ratio significantly (see Table 2). These variables were concerned with the acquisition of blueprint, handbook and software (i.e. C51), key equipment and apparatus (i.e. C63), as well as set of equipment (i.e. C71). These technologies were mainly transferred or purchased

Discussion and conclusion

The nationwide survey described in this paper was an attempt to explore the impacts of technology transfer on innovation performance with special reference to Chinese industrial firms. The empirical results partly verify the hypotheses in this study to some extent. Inspite of this, the following major findings could be made:

  • (i)

    Empirical analyses show that the adoption of transferred and/or purchased technologies has both positive and negative impacts on Chinese firms. It seems impossible to give a

Acknowledgements

The work described in this paper is supported by the strategic research grant of the City University of Hong Kong (No. 7001450-630) and a grant from the National Natural Science Foundation of China (No. 70372012). The authors also wish to express their grateful appreciation to the Beijing Science and Technology Committee and Ministry of S and T of China for their assistance in the mass survey. Thanks are also due to Mr. Baiyang Gao and Huasheng Zhang for their assistance in collecting and

J.C. Guan is a Professor at the School of Management of the Beijing University of Aeronautics and Astronautics. His current research interests are in the areas of technological innovation management and engineering management.

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  • Cited by (0)

    J.C. Guan is a Professor at the School of Management of the Beijing University of Aeronautics and Astronautics. His current research interests are in the areas of technological innovation management and engineering management.

    C.K. Mok received his BSc degree in Production Engineering from the University of Aston in Birmingham in England in 1979. He is now a Chartered Engineer and holding memberships in the Institution of Electric engineers in U.K. and the Hong Kong Institution of Engineers. He started his job as a production engineer and worked up to the post of engineering manager in one of the largest manufacturers in Hong Kong from 1980 to 1988, specializing in machine and process design and development. He obtained his MPhil from the City University of Hong Kong in 1996. He is currently an assistant professor in the Department of Manufacturing Engineering and Engineering Management of the City University of Hong Kong.

    R.C.M. Yam is an Associate Professor in the Department of Manufacturing Engineering and Engineering Management at City University of Hong Kong. Yam is the program leader of the Master of Science program in engineering management. His current research interests are in the areas of manufacturing strategies, innovation and technology management, smart asset and maintenance management.

    K.S. Chin is an Associate Professor in the Department of Manufacturing Engineering and Engineering Management, City University of Hong Kong. Before joining the university in 1991, Dr Chin has had more than ten years of experience in the Hong Kong manufacturing industry, holding senior positions in industrial engineering, product development and quality management. He is a Chartered Engineer in the UK and Registered Professional Engineer in Hong Kong. Dr Chin is a Senior Member and International Council member of American Society for Quality (ASQ), USA, and senior member of the Institute of Industrial Engineers (IIE), USA and Society of Manufacturing Engineers (SME), USA. He is the Fellow of Hong Kong Society for Quality (HKSQ) and Fellow of the Hong Kong Quality Management Association (HKQMA). Dr. Chin is the Programme Leader of BEng Industrial Engineering and Engineering Management. His research interests are quality systems and management, and new product development strategies and process. Dr. Chin has published over 70 international refereed journal papers in the fields of industrial engineering, quality management and product development.

    K.F. Pun is a Senior Lecturer in the Department of Mechanical Engineering of the University of the West Indies. Pun holds a Chartered/Registered Professional Engineer status in the UK, Europe, Australia, and Hong Kong. His current research interests are in areas of industrial engineering, technology management, and engineering management.

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