Schulich research challenges conventional thoughts on high-speed train sector in China

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Relational assets or liabilities? New research out of the Schulich School of Business examines competition, collaboration and firm intellectual property breakthrough in the Chinese high-speed train sector.

How does government coordination in the strategic sectors affect the impact of relational resources on firm intellectual property (IP) development in emerging economies?

A photo of Justin Tan
Justin Tan

A research team led by Professor Justin Tan of York University’s Schulich School of Business attempted to address this question by investigating innovative performance in China’s high-speed train sector.

The research, reported in a new paper recently published in the Journal of International Business Studies, challenged some widely held conventional wisdom. For instance, contrary to prior findings that international joint ventures (IJVs) lead technological innovation in the emerging economies, IJVs under-perform in IP development in the context of China’s high-speed train sector, whereas government-affiliated domestic firms out-perform.

The authors argue government coordination in the strategic sector has escalated cross-border competitive tension but facilitated domestic collaborative innovation. Hence, IJVs face relational liabilities that hinder IP breakthrough, whereas government-affiliated domestic firms can leverage relational assets for innovation. The authors further examine the effects of ego-network density in the innovation network, which captures the degree to which a firm relies on partners to innovate. Consistent with this theory, innovation network density hampers IP development for the IJVs but promotes it for the government-affiliated domestic firms.

The findings, based on comprehensive proprietary panel data from 1993 to 2014, offer actionable insights for innovation managers and policymakers in the strategic sectors. Firm managers should consider the potential influences from government coordination when acquiring relational resources for innovation. Policymakers should keep in mind how government actions may influence both inter-firm collaboration and competition when building an innovation network. Given the significant role, Canadian companies such as Bombardier have played in the development of the Chinese rail transportation equipment manufacturing industry, and many other key suppliers who are customers, suppliers, research and development partners, and competitors, this line of research has profound implications for vital Canadian economic interests.

The research paper, titled “Relational Assets or Liabilities? Competition, Collaboration, and Firm Intellectual Property Breakthrough in the Chinese High-Speed Train Sector,” was co-authored by Aurora Liu Genin (PhD, Schulich), assistant professor of management at the University of Massachusetts Amherst in the U.S.; Tan, professor of management and the Newmont Chair in Business Strategy at the Schulich School of Business in Canada; and Juan Song, professor of management at Central South University in China. It is part of a comprehensive research project about governance reform, innovation and technology development in the rail transportation equipment manufacturing industry. Another research paper from the project was also published in the Journal of International Business Studies in 2021 (“State Governance and Technological Innovation in Emerging Economies: State-Owned Enterprise Restructuration and Institutional Logic Dissonance in China’s High-Speed Train Sector”).

A copy of the study can be found here.