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 "imitation to innovation" [1] 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 "trading market for technology" 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 inter-organisational 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.