Abstract
A structural innovation model is employed to examine how the entrepreneurial activities of the state shape the process of ‘indigenous’ innovation in China. Distinguishing between state-owned and privately-owned enterprises, emphasis is placed on comparing how a range of industry and firm level characteristics - e.g. technological opportunities, public subsidies, FDI, firm’s skill level and innovative success - respectively influence the process of private-led versus state-led innovation. In general, the results help to reveal that the Chinese state should become less ‘entrepreneurial,’ in favor of further decentralization and marketization that will lead to more efficient innovation and higher firm productivity in both higher and lower tech industries.
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