The role of inter-firm relationships in the technological catching-up of the Chinese telecommunications industry: some paradoxes highlighted

Inter-organisational relationships with established foreign incumbents in a position to transfer valuable knowledge have been identified as a way to foster a process of technological catching-up in emerging economies. A successful process of technological catching-up can best be described as moving from ldquoimitation to innovationrdquo in which public policy may play an influential role. Chinese policy has incited the creation of joint ventures between research centres, domestic firms and foreign firms, as a centrepiece of its catching-up policy. In particular, joint ventures with foreign firms have been a key arrangement allowing access to up-to-date technology, in the context of the ldquotrading market for technologyrdquo policy. In this paper we analyse the role played by inter-firm relationships in knowledge transfer and creation in the context of the Chinese telecommunications industry, and in particular of the network equipment industry. We first present a literature review in order to understand the role of inter-firms relationships in transferring knowledge. We then analyse the role played by interorganizational arrangements such as partnerships and Joint-Ventures between foreign and Chinese telecommunications firms in the Chinese catching up process. We conclude by discussing some paradoxes arising from this case of networks triggered by public policy.