Why not greater catch-up by Chinese firms? The impact of IPR, corporate governance and technology intensity on late-comer strategies

How can ‘late-comer firms’ (LCFs) in developing economies manage their development of technological capability, and within it their IP, strategically, in order to become fully competitive internationally? Under what conditions, external and internal, are they likely to succeed? This paper develops a theoretical framework for understanding LCFs’ technology strategy and predicting its outcome, then applies it to the cases of three Chinese firms in sectors at different levels of technology intensity. This yields insights as to its limitations and further development. These help explain mainland China's very limited catch-up in high technology sectors – and to a lesser extent in medium-high technology. We show how our findings can be reconciled with the much greater success of Korean firms some 20 years earlier, if the effect of corporate governance differences is recognised.

► Early catch-up demands imitative or dependent technology strategy: the choice depends largely on corporate governance.
► Firms which choose dependent strategy fail, and undermine others’ catch-up: common in China.
► Later catch-up demands defensive strategy, harder for high-tech than for medium-, particularly with strong IPR.
► Among our three Chinese state-owned firms, Changhong confirms the difficulties of catch-up in high-tech.
► Unexpected findings include: ‘military’ governance is advantageous (CNEGC); in low-tech, catch-up may be irrelevant (Grace).