Relevance of Own R&D and Sources of Knowledge Transfer for Industrial Innovation in China


  • Wan-Hsin Liu

    Corresponding author
    1. Kiel Institute for the World Economy, Kiel, Germany
    • Corresponding author: Wan-Hsin Liu, Kiel Institute for the World Economy, Hindenburgufer 66, 24105 Kiel, Germany. Tel: +49(0)431-8814269; Fax: +49(0)431 8814500; Email:

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  • I would like to thank two anonymous referees, Frank Bickenbach, Eckhardt Bode, Johannes Bröcker, Dirk Dohse, Holger Görg, and Rüdiger Soltwedel for their valuable comments and useful suggestions. The financial support from the German Research Foundation (DFG) for the Priority Program 1233: Megacities–Megachallenge: Informal Dynamics of Global Change is gratefully acknowledged. This paper is based on the second chapter of my Ph.D dissertation. An earlier version of the paper is available as a Kiel Working Paper.


This study investigates industrial innovation and innovation patterns in China with a comparison to the Asian Newly Industrialized Economies (NIEs). It estimates knowledge production functions based on an original firm-level dataset. Estimation results suggest that even though firms in China carry out various innovation activities at the same time, the innovation pattern found among their counterparts in the Asian NIEs is still relevant for contemporary China. In particular, sourcing knowledge and technologies from their OEM customers still plays a crucial role for Chinese firms' process innovation. In contrast, firms cannot rely on this knowledge source for realizing more sophisticated, knowledge-intensive innovation outcomes, such as product innovation and patenting, for which their own R&D engagement is more significant.