firms with high levels of absorptive capacity invested more in their own RD

Firms with high levels of absorptive capacity

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firms with high levels of absorptive capacity invested more in their own R&D, utilizeed alliances, in-house expertise with relevant technologies, and communications with alliance partners. Absorptive capacity of allainces partners are related to learning process. Lane and Lubakin (1998) argue that absorptive capacity is a function of the absorptive capacity of the dyad. Koza and Lewin (1998) address the importance of absorptive capacity by considering different type of alliances in terms of non-equity allainces (such as joint R&D, franchasing, and licensing) and equity alliances (such as joint venture). They propose that non-equity based exploration alliances are greater interdependent than equity based exploitation between absorptive capcity and learning of each partner. 3. Catching up Analysis in Chinese context Based on a historical analysis, Mokyr (1990) argues that technology catching up is an outcome of a process of technology accumulation. Abramovitz (1989:222) argues that a country’s potential for rapid growth is strong not when it is backward without qualification, but rather when it is technologically backward but socially advanced. In other words, absorptive capacity can be established only if sufficient social capability has been built . In the dynamic economic evolution, the potential for developing absorptive capacity at a basic level is not only associated with a country’s endowment of high skilled labor but also closely related to the corresponding mechanism of open communication. Therefore, we argue that an embedded catching up system is developed within an individual- organization-society ‘pyramid’ in which absorptive capacity is built on social capability and catching up is generated when absorptive capacity and social capacity are prepared. 3.1 China’s absorptive capacity at national level To measure China’s national-level absorptive capacity, two indicators can be chosen. First is the endowment of researchers and the other is the ratio of R&D investment over GDP . According to the announcement from OECD in 2006, the number of researchers in China has increased over 77% from 1995 to 2005, China has ranked the second worldwide with 926 000 researchers by 2005, just behind the United States. Figure 1 gives the comparison across OESO, Netherlands, European Union Countries, and China on ratio of R&D investment over GDP. In order to identify the main characteristics of China’s national absorptive capacity, the source of R&D expenses and the allocated distribution of R&D fund are also considered. From figure1 we can see China’s investment in R&D over GDP was averagely above 1.05% per year; by 2006, this ratio had approached to 1.5%. According to the report submitted by National Development and Reform Commission to National People’s Congress, C hina is aiming to raise spending on research and development up to 1.58 percent of GDP in 2009. These two indicators implicate that China’s absorptive capacity at national level has been tremendously developed; measuring at a country level, the technology gap between China and European developed countries is getting smaller.
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