Corporate Governance and Technological Capability Development: Three Case Studies in the Chinese Auto Industry

Jiajia Liu and Andrew Tylecote

Industry and Innovation, 2009, vol. 16, issue 4-5, 525-544

Abstract: This paper examines how firms' technological capability development is affected by corporate governance, broadly understood: “how and by whom the firm is directed and controlled”. Three state-owned companies are studied. Shanghai Auto Industry Corporation (SAIC) is a long-established “favoured” enterprise controlled on rather traditional lines. Chery is a small under-funded latecomer that receives exceptional “engagement” from its controlling local and provincial government. Guizhou Tyre (GTC) is long-established but also receives exceptional engagement. The firms' governance structures and their processes of technological capability building were tracked and compared. Data on SAIC and Chery was mainly from secondary sources; on GTC, from extensive interviewing of management and site observations. There were two main findings: first, it was the two with unusual engagement which were more successful in developing “endogenous” or “self-reliant” technological capability. Second, two alternative technological strategies could be distinguished: “bundled” or “unbundled” technology acquisition. Chery and GTC chose “unbundling”. We show why it was more successful and why it followed from the corporate governance situation.

Keywords: Technological capability; corporate governance; China; automotive industry (search for similar items in EconPapers)
Date: 2009
References: View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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DOI: 10.1080/13662710903053805

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