Innovation practices success in China: the use of innovation mechanisms in Chinese SOEs

Abstract

PurposeThe climate for technical innovation has been improving in the past few years in China. This paper describes a case research concerning technical innovation practices success in three Chinese state‐owned enterprises (SOEs) in the manufacturing industry. This is executed by applying a technical innovation audit tool based on “Western” good practices.Design/methodology/approachStudies on technical innovation in the Chinese SOEs started in the 1990s, but most investigations in this field were based on statistical survey and mathematical modelling. In this research, case study research method, including such strategies as open‐ended, in‐depth questions, intensive interviews and observations, are applied for the validity of information.FindingsThe data and results reveal that the investigated Chinese SOEs have already some mechanisms for innovation in place. But there is still room for improvement and enhancement with respect to the effect on innovation success. It is also concluded that benchmarking (through the application of the technical innovation audit tool) does guide the Chinese management toward deciding which innovation mechanisms to adopt so as to provide the basics for innovation success. Additionally, based on the case studies the interesting conclusion could be drawn. In the context of the Chinese economy in transition, the case companies with less openness to the market (i.e. with high government involvement) have a more widespread use of innovation mechanisms.Practical implicationsThe last finding seems to contradict the positive relationship between market focus and innovativeness as suggested in “Western” innovation management theories. For clarification we relate this to the way the SOEs deal with their adaptive cycle, thereby considering their way of dealing with (increased) complexity as compared to “Western” companies (complexity absorption versus reduction). The considered cases are embedded in the institutional setting of China in transition. Therefore, the conclusions and findings enrich the theory of transition by revealing the point that entering an open market abruptly may not be the solution for SOEs, which are rooted in a socialist economy, to become more competitive and more innovative. This was mostly elaborated through the influence of the two main stakeholders (i.e. government and customer/end‐user) on the openness of the SOEs and their use of innovation mechanisms in China, the largest socialist system of the world.Originality/valueThis paper is based on a doctoral research project, containing reliable, first hand data from the practice.