J Technol Transfer (2007) 32:123126

DOI 10.1007/s10961-006-9003-1

Research on innovation management and technology

transfer in China

George F. Farris

Published online: 29 September 2006

Springer Science+Business Media, LLC 2006

Abstract Research on innovation management and technology transfer in China is

in its early stages and growing rapidly, as technology is transferred to Chinese
organizations and the organizations themselves create innovations. The studies to
date provide promising theoretical ideas, but specific findings should be regarded as
tentative, due to the research designs and methods employed. As with early research
on innovation in the West, it is likely that these early studies of innovation in China
will have significant impact on innovation research and practice in the future, both in
China and throughout the world.

Keywords Innovation management China Globalization Technology transfer

JEL Classification O31 O32

China is an exciting place to be at the beginning of the 21st Century. The economy in
much of the country is undergoing tremendous growth, organizations and the
business environment are being transformed, and prosperity is beginning to spread
to many sectors of society and regions of the country. Technological innovation is
playing an important role in these developments. Much of the innovation originates
abroad and is transferred to organizations in China, but increasingly, innovation is
occurring in Chinese organizations themselves and transferred among them.
At the same time, management research in China is beginning to develop rapidly.
Faculty are being trained, professional associations are being formed, and confer-
ences are being held. Chinese management researchers are submitting papers to
international journals in record numbers. Among the emerging areas of research
interest is the management of technological innovation.

G. F. Farris (&)
Department of Management and Global Business, Rutgers Business School Newark and New
Brunswick, 302 Management Education Center, 111 Washington Street,
Newark, NJ 07102-3027, USA
e-mail: gfarris@rutgers.edu
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124 George F. Farris

The papers in this special issue represent some of the first of this research. They
span a wide range of topics relevant to innovation in China today: Total Innovation
Management, (TIM) product and process innovation in state owned enterprises
(SOEs), ways Chinese firms can compete with multinational enterprises, and
knowledge transfer within transnational corporations active in China. The papers
employ a variety of research methods, including case studies, surveys, and inductive
model building.
The papers on TIM represent an ambitious attempt to develop and apply a
comprehensive theory of innovation. The authors consider innovation to include not
only technological innovation, but also the development of creative ideas which
facilitate production processes, marketing, or the development of new services.
Thus, TIM attempts to address issues of both invention and innovation.
Total Innovation Management: a Novel Paradigm of Innovation Management in
the 21st Century does a fine job of reviewing the literature and placing TIM in
historical context. Its greatest strength is its attempt to be comprehensive,
accounting for all new ideas emerging from anywhere inside and outside the orga-
nization and their translation into new products, processes, or services. Thus, it deals
with knowledge management, engineering management, and innovation manage-
ment. Technology transfer is clearly a critical aspect of TIM, although it is not yet
addressed explicitly.
But TIMs greatest weakness is likely to be this same attempt to be compre-
hensive: by pointing in so many directions to understand innovation, TIM does not
yet do a good job of identifying priorities or indicating where managers and
researchers should look first to understand what is more and less important for a
given innovation. TIM is an evolving theory, and further versions may develop
specific propositions and address more specific issues. The four future research
directions at the end of the paper suggest that this will happen.
The framework appears to be consistent with the case examples of successful
innovation as described in the papers about Haier and HP. The analysis of the
successful manufacturing company Haier is very interesting reading. Starting with
the perspective of Haier managers and their descriptions and interpretations of
success factors, the paper goes on to show that these ideas are consistent with TIM.
Figure 10, Pentagon model of Total Innovation Management, is a nice visual
summary of key elements in Haiers success, and the questions raised for further
research are very appropriate.
Similarly, the paper on HP provides an excellent description of the development
of a highly successful technology-based company in the United States. It is based
mainly on two sourcespublic information about the company, and David
Packards book, The HP Way. The HP experience is then reviewed in terms of TIM
and found to be consistent with it, and an insightful comparison is drawn between
HP and Haier in terms of TIM. This comparison indicates some of the potential of
TIM to explain innovation in widely divergent settings and time periods. Perhaps
significantly, both Ruimin Zhang of Haier and David Packard of HP developed their
own personal concepts of effective innovation management (Haiers Tao of Inno-
vation and the HP Way), and both these concepts are broadly consistent with TIM.
HP has undergone significant changes during the last few years; it would be
illuminating to see an application of TIM theory to explain and even to predict the
changes and their consequences.

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Ultimately, TIMs ideas should be subjected to a more scientific test, if possible,

for example along the lines of the early SAPPHO study cited in the TIM paper.
SAPPHO researchers compared success and failure in attempts at industrial inno-
vation, and by doing so, they were able to identify success factors. At the end of the
TIM paper the authors call for identification of critical success factors in TIM. I fully
agree. The classic scientific method involves comparison and repeatability, and I am
pleased that the authors anticipate designing further research to identify critical
success factors for TIM.
To sum up, a theory is useful if it helps you to think. TIM clearly meets this
criterion. It needs further refinement and testing, but it is a promising approach to
understanding the management of innovation and factors affecting the transfer of
technology.
Product Innovation and Process Innovation in SOES: Evidence from the
Chinese Transition is a sophisticated study grounded in the literature on techno-
logical innovation. Using a sample of 274 SOEs from three provinces, it examines
product and process innovation as a function of environmental turbulence and
organizational resources. The reported findings indicate that product and process
innovation depend on a strategic decisions which are influenced by the market,
capital and capability constraints, government control, and internal governance
improvement.
This study is an ambitious attempt to understand the course of innovation as
SOEs encounter market forces, develop strategies, and allocate resources to cope
with their changing environments. It is not hyperbole to describe this paper as
pioneering. The specific findings should be viewed cautiously, however, since all
the variables were measured by single informants from each company. The rela-
tionships reported are really cognitive maps in the minds of these informants
which may or may not reflect actual relationships. The authors took steps to mitigate
the effects of single-source perceptual measures of organizational phenomena, but
the weakness in study design remains. Therefore, the specific findings can best serve
as hypotheses for future studies.
In discussing their results the authors point to very interesting possibilities for
such further research. As they point out, dramatic economic transition is underway
in China. This transition is being implemented by many types of organiza-
tionsState Owned Enterprises, multinationals, joint ventures, etc. All of them
innovate to an extent, all of them face opportunities and threats, and all of them are
involved in technology transfer. Empirical studies like theirs will be helpful in
understanding the fast moving changes in transitional China.
How should Chinese firms compete with multinational enterprises in Chinaby
developing expertise in low cost manufacturing or by innovating? Competing with
MNEs: Developing Manufacturing Capabilities or Innovation Capabilities raises
this question. It develops a framework for answering this question and tests two
propositions of the framework with case studies of two Chinese firms. The frame-
work is very sensible; it argues that the choice between developing expertise in
manufacturing or in innovation is a function of two factors: barriers to appropri-
ability and opportunities for improvement. With high barriers and few opportunities
for innovation, a manufacturing strategy is appropriate; with low barriers and many
opportunities for innovation, an innovation strategy should be followed. When both
barriers and opportunities are high, either strategy may be followed; when both are
low, a niche market strategy is in order.
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This paper is valuable because it points out that strong manufacturing capabilities
will not always allow local firms to compete effectively with multinationals; when
there are good opportunities for improvement, local firms can compete effectively
with multinationals by developing their own innovation capabilities. The appropri-
ability-opportunities framework is a useful one for deciding which ways to compete.
The two cases presented in the paper add substance to these theoretical ideas;
however, more research must be conducted to see if the entire framework holds up.
Finally, Towards a Model of Effective Knowledge Transfer within Transna-
tionals: the Case of Chinese Foreign Invested Enterprises proposes a useful model
of knowledge transfer within transnational corporations. The model argues that
knowledge creation, sharing, and use are a function of the flexibility of world views,
the relationship bonds which are formed, and absorptive capacity. Three proposi-
tions are offered: knowledge creation will increase when organizational members
have flexible world views; knowledge transfer will increase when relationship bonds
between distant organizational members are higher; and knowledge transfer will
increase when absorptive capacity is higher. The paper ends with questions to be
explored in future development of the model. No data are presented, since this is a
theoretical paper.
The model is clearly presented and makes very good sense. It is useful to consider
separately the generation, sharing, and use of knowledge and the factors which are
apt to increase each. The three propositions, while justified nicely in the paper,
remain to be tested, and they are very likely only a part of the story of effective
knowledge transfer. For example, it could be argued that relationship bonds are
pervasive and apt to affect knowledge creation and use as well as transfer. Similarly,
flexibility of world views may affect knowledge sharing and use, and absorptive
capacity may also affect knowledge creation and sharing. It will be interesting to see
the results of future studies based on this knowledge transfer model.
Taken together, the six papers in this special issue reflect some of the most
interesting results of research already underway on management of innovation and
technology transfer in China. Despite the range of topics and approaches, all the
papers have a practical bent and attempt to draw implications useful to managers in
China, and all of them address issues related to technology transfer in one way or
another. Because they use a variety of research methods with varying degrees of
success, their specific findings should be regarded as tentative, needing further
replication in other studies.
In many ways these studies call to mind some of the early research on manage-
ment of technology and innovation in North America and Europe. Here too,
concepts needed refining, research designs needed improvement, and results were
not definitive. Yet the impact of many of these early studies is undeniable. I am
confident that in the coming years there will be many additional important studies of
innovation in China and that many of them will cite ideas and findings from these
special issue papers. Innovation is alive and well in China, as these papers show. This
early research on technological innovation in China will soon be influential in North
America and Europe as well.

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