Abstract: The technological catch-up behavior of latecomer firms has been a topic of interest for the past three decades, especially in emerging economies, such as China and India. In recent years, Chinese firms have extensively involved in the world economy. A number of Chinese firms have growing from simply path-following and imitation to advancing side by side in some competition fields, and some latecomers even become global innovation leaders, such as Huawei in the mobile telecommunication industry, Haier, Midea, and Gree in the home appliance industry, and China Railway Rolling Stock Corporation (CRRC) in the high-speed train industry.
As more latecomer firms have extended their capabilities and entered into a “mixture state” – path-following, advancing side by side, and leapfrogging to a leadership simultaneously, there is an obvious need to develop a new framework of catch-up for explaining how firms walked through unique paths to build their global competitiveness from an open innovation view. The open innovation perspective in this study is focused on the cross-boundary strategic choices. Some researchers have found that firms’ knowledge sourcing strategy is not a simple dichotomy between internalization and externalization, involving a mixed degree of openness depending on the project. So far, little research has systematically discussed the path of catch-up based on the cross-boundary synergy among organizational, technological and market boundaries, which are essential choices of in the open innovation paradigm.
Therefore, it is intriguing to investigate the research question of “what are the possible paths of catch-up when building global competitiveness, and why firms adopt different patterns of cross-boundary synergy during the process of catch-up in the open innovation era”. To answer these questions, this study first proposes a new conceptual framework of catch-up by integrating firm’s practice with technological catch-up literature, and based on that, it conducts a multiple-case study on three leading Chinese companies in the home appliance industry, namely Haier,Gree and Midea. Case study methods are well suited to study dynamic issues and answer “how” and “why” questions. Cases are chosen since they all start by importing foreign technologies as OEM manufacturers, but achieve excellent performance and become popular brands in global markets after many years catch-up. In addition, they show variations in openness during the process of catching up, which corresponds with the emphasis on open innovation in this study.
The conceptual framework of catch-up framework is characterized by the higher position of catch-up, the greater depth of catch-up, and the broader scope of catch-up. The position of catch-up is related to a firm’s specific resource endowments, in terms of technology, complementary assets, its customer base, and its external relations with suppliers,complementors, and other stakeholders. The depth of catch-up is related to the extent of specialization and sophistication of a firm’s capability within a specific technology or competitive field of the market. The scope of catch-up is, on one hand, related to expanding and synthesizing knowledge across a wide variety of technological disciplines. On the other hand, it seeks a systemic industrial leadership in terms of technology, production, marketing and organizational practices, moving beyond the technology-dominant view of the catch-up process.
By applying this framework to cases, this study reveals distinctive paths of catch-up. The first path shows “broad scope — broader scope — synergy between scope and depth”; the second path is feature with “great depth — greater depth — synergy between depth and scope”; the third path evolves along “broad scope — great depth — synergy between scope and depth”. Although three paths differ in the start-up phase and acceleration phase, all of them transform towards the synergy between the scope and depth of catch-up in the last phase, which is named as “beyond catch-up phase” in this study.
In addition, this study also identifies three patterns of catch-up, as latecomer firms need to choose synergy patterns when interact with partners, which is associated with their path as well as specific asset position developed during the path. For the first path, the firm accumulates commercial resources across industries to support autonomouscomplementors for innovative responses to client requirements. For the second path, the firm equipped with specialized knowledge integrates with complementors to control undesirable variance. For the third path, the firm leverages complementary asset for maximum value with simultaneously controlled and autonomous actions.
This study makes three primary contributions. Firstly, while the conventional studies of latecomers’ path of catch-up are primarily based on a technology-oriented view, we move beyond this standpoint by identifying multiple elements systematically. Specifically, the proposed conceptual framework directs attention to the importance of the position, depth, and scope of catch-up in the open innovation context. In this way, it extends catch-up literature beyond a fixed technology or a linear trajectory, emphasizing an integrative and non-linear approach instead.
Secondly, by revealing distinctive paths of catch-up, this study adds to the recent discussion of changes in industrial leadership, which involves innovative behaviors and paths of latecomers. It shows that during the process of catching up, firms may not only diverge from the practices of forerunner firms from developed countries, but also differentiate from competitors born in the domestic markets.
Thirdly, this study deepens the understanding of how to manage open innovation for successful catch-up. Different from the dominant view of the acquisition and control of heterogeneous resource, this study highlights that the pattern of innovation collaborations for catch-up can be autonomous, controlled or mixed both simultaneously. The pattern of catch-up from the open innovation view is difficult to replicate and must be adapted to the specific position, scope, and depth of catch-up. It thus enhances the co-evolutionary relations between organizations and challenges of the dynamic environment.