Relevance of Own R&D and Sources of Knowledge Transfer for Industrial Innovation in China

This paper investigates industrial innovation and innovation pattern in China with a comparison to the Asian Newly Industrialized Economies (NIEs). It estimates knowledge production functions based on an original firm-level dataset. Estimation results suggest that even though firms in China carry out various innovation activities at the same time, the innovation pattern found among their counterparts in the Asian NIEs is still relevant for the current China. More concretely, sourcing knowledge and technologies from their OEM customers still plays a crucial role for Chinese firms’ process innovation nowadays. In contrast, firms cannot rely on this knowledge source for realizing more sophisticated, knowledge-intensive innovation outcomes such as product innovation and patenting, for which their own R&D engagement matters more substantially.

Kiel Institute Expert