Developing Innovative Competences in an Emerging Business System: New Private Enterprises in Hangzhou’s Software Industry

51 Pages Posted: 8 Sep 2009

See all articles by M. J. Greeven

M. J. Greeven

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM)

Zhao Xiaodong

Zhejiang University

Date Written: August 2009 8,

Abstract

What kind of innovative competences are credibly developed by private entrepreneurs in China’s transition economy? On the basis of original empirical fieldwork in 45 software enterprises in Hangzhou, Zhejiang Province, we propose a working theory of innovative competence development in an emerging private sector. Combining resource-based and institutional perspectives we argue that Chinese private enterprises in Hangzhou were able to develop unique innovative competences to overcome resource constraints and manage technical - and market risks while respecting the location and sector-specific constraints. The findings suggest that private software enterprises in Hangzhou developed five innovative competences: organizational integration, financial commitment, external knowledge transformation, reputation development and strategic flexibility. The analysis further allows to propose three implications: 1) These five competences form a ‘configuration’ or coherent set of competences in this particular institutional setting; 2) Technological – and institutional regimes shape the potential range of innovative competences firms credibly develop depending on the available resources of the firm; 3) Innovative competences can be functional equivalents of institutions in the absence of well-developed, mature formal institutions.

Keywords: private entrepreneurs, innovation, China, software industry, institutions, competences, business system

JEL Classification: M13, O32, M

Suggested Citation

Greeven, M. J. and Xiaodong, Zhao, Developing Innovative Competences in an Emerging Business System: New Private Enterprises in Hangzhou’s Software Industry (August 2009 8,). ERIM Report Series Reference No. ERS-2009-045-ORG, Available at SSRN: https://ssrn.com/abstract=1466507

M. J. Greeven (Contact Author)

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM) ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam, 3000 DR
Netherlands

Zhao Xiaodong

Zhejiang University ( email )

38 Zheda Road
Hangzhou, Zhejiang 310058
China

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