Características de la Empresa de Ingeniería y Proyecto del MINAZ.

Almost a century ago, Schumpeterian theories pointed out that innovation holds the key to the competitiveness of entrepreneurs and economic growth as a whole. With the recognition of the significance of innovation, much efforts have been made to explore and understand innovation. In this chapter, some well-established theories on innovation are reviewed. Important implications have been drawn from the reviewed innovation theories. Based on these implications, a number of factors that influence the innovation performance of a firm were concluded. These factors are summarised and presented in Table 2.1.

Table 2.1: Summary of Factors that Influence Innovation

Factors Description

Strategic Focus on Innovation

The strategic focus on innovation guides a firm towards an innovation-driven strategy, which defines the purpose of a firm, as suggested by both the concept of innovation culture and strategic intent (Katz, 2003; Hamel and Prahalad, 1989). Therefore, the strategic focus on innovation enhances the innovation performance of a firm.

Commitment of

Organisational Resources

Resources are taken as the basis of innovation activities. Hence, despite the risk of resource investments on innovation as suggested by Tidd et al. (2005), the corporate strategy towards innovation needs the commitment of organisational resources to achieve specific innovation goals (Katz, 2003; Estrin, 2009; Hamel and Prahalad, 1989).

Accessibility to External Resources

The evolution from the integrated model of innovation to the system integration and networking represents the shift of attention towards external collaborations (Rothwell, 1994; Nobelius, 2004). External collaboration can allow extra resources to a firm that improve the likelihood of innovation results. Similar arguments are made by other innovation theories, such as the Open Innovation theory and Innovative Milieu. Hence, the accessibility to external resources is taken as a factor that influences the innovation performance of a firm.

Marketing & Industry as Drivers

Both the need of the market and technology advancement are driving forces behind innovation activities as suggested in innovation process models (Rothwell, 1994; Nobelius, 2004). Therefore, the observation of both market and industry is taken as a factor to build up a good innovation capacity.

A Process of Innovation

Innovation itself is a process of turning resources into commercially valuable results (Schumpeter, 1934; Freeman, 1982). As suggested in the innovation process models, the actual process of innovation of a firm can impact the innovation (Rothwell, 1994; Nobelius, 2004). Hence, the process of innovation of a firm is taken as a factor that influences the innovation performance of a firm.

In conclusion, there are five factors that were established from the current literature. These factors are suggested by the current literature to be the factors that influence the innovation performance of a firm. These five factors can be further classified into a number of categories based on the areas of focus. The categorisation of these factors and the logic behind the categorisation is presented in Table 2.2.

Table 2.2: Categories of Themes and Factors

Categories Factors Description

F1:

Innovation Environment

F1.1: Strategic Focus

The strategic focus of the senior leadership and the commitment of organisational resources together create an innovation-friendly environment, which supports innovation. F1.2: Resource

Commitment F2:

Resources Accessibility

N/A Acquiring external resources, such as external

technology, ideas, knowledge, and R&D capability is important to build up innovation capacity of a firm.

F3:

Innovation

F3.1: Market & Industry as Drivers

The process of generating innovation is driven by the understanding of both the need of the

Process F3.2: A Process of Innovation

market and industry development. This process plays an important role in innovation activities.

This research finds that the three categories represent three main themes in understanding a firm’s innovation behaviour. These themes and factors will be taken forward as the theoretical basis of this research, and this research will understand the innovation behaviour in accordance to these factors.

Other than the factors that influence innovation, it is necessary for this research to assess how much innovation is being generated by the automotive firms in China. Therefore, this chapter also reviewed some theoretical innovation performance measurement methods. Current literature suggests that in measuring the innovation performance of a firm, there are qualitative and quantitative methods that serve different areas of focus. Both qualitatitive and quantitative methods have their balance of advantages and disadvantages. Considering the focus of this research, the combination of both qualitative and quantitative methods can generate relatively clearer results. Therefore, this research will measure the innovation performance of IJVs as well as other firms using the combination of both qualitatitive and quantitative methods.

As discussed previously, innovation holds the key to the sustainable economic growth of China. It is the same with the development of China’s automotive industry. Currently, the major issue with China’s automotive industry is that the local automotive firms are not capable of delivering technologies that can compete with those of the automotive MNCs. Therefore, the Chinese government has been issuing policies in order to encourage international collaborations between local firms and MNCs. Specifically in the automotive industry, the form of IJV is strictly required. The reason behind such an insistence on IJVs reflects the hope that the local automotive firms can access the resources and learn from the highly capable automotive MNCs in order to develop the indigenous innovation capacity of automotive industry in China.

Considering the factors that influence innovation (F1–F3), it seems that this strategy of government is supported by the current innovation. This is primarily because the

collaboration with MNCs improves the resource input in the innovation activities, which in turn can potentially enhance the innovation performance. Also, the organisational learning from MNCs can have a positive influence on the environment of innovation as well as the innovation process of the local firm. Hence, at this point, it seems that the collaboration with MNCs can indeed be taken as a means to enhance the innovation capability of local firms. However, the features of international collaboration with MNCs, especially in the form of IJVs, have not been discussed from a theoretical perspective so far. Taking note of this, the next chapter will to look at the current literature on international collaboration and international joint ventures in order to further understand the theoretical basis of the Chinese government’s insistence on IJVs.