My work with Qiwen Lu:

I have been engaged in China-related research since the early 1990s when I led an international project on "indigenous innovation and economic development". The purpose of the project was to understand how poorer nations could transfer technological knowledge from abroad, and then develop and utilize that knowledge to generate higher quality, lower cost products. The project built on both my comparative-historical research, which heretofore had focused mainly on the advanced economies of Britain and the United States, and my theory of innovative enterprise, which showed how, through strategy, organizaton, and finance, a business enterprise could transform technologies and access markets to gain sustained competitive advantage. The prime focus of the project was to explain how over the course of the 20th century, Japan had transformed itself from a relatively poor nation into a relatively rich nation.

From my comparative historical studies of the dynamics of economic development, it seemed to me in the early 1990s that China and India were poised to engage in indigenous innovation that could drive their economic development. At the time, I had not been to China. I had been scheduled to go to Beijing and Shanghai in June 1989 to give a series of lectures on "The Present and Future of Capitalism". The Tiananmen Square crackdown took place on June 4. I arrived in Hong Kong on June 8, and was supposed to enter China to give my lectures the following week. But people, especially foriegners, were streaming out of China into Hong Kong. The universities were closed. The lectures did not take place, and it would be a long time before I would have the opportunity to visit China.

In September 1990 I had the very good fortune to hire Qiwen Lu as a research assistant on our indigenous innovation project. Qiwen had just come from China to do a Ph.D. in sociology at Harvard. Once Qiwen finished his course work, he secured an Alfred Chandler Travel Grant from Harvard Business School to spend a summer in China exploring the evolution of a number of computer-related business enterprises that had emerged and grown subsequent to China's 1978 economic reforms. He returned from China full of stories about the companies that he had visited, and decided to make three of them -- Stone, Legend, and Founder -- the subjects of his research for his Ph.D. thesis. At my UMass Lowell Center for Industrial Competitiveness, I managed to scrape together $15,000 that covered the cost of Qiwen's six months of field work in China while he was supporting his wife Lili (who was a student at the time) and daughter Mindy back in Cambridge. The result was a superb thesis on indigenous innovation in China, completed in 1996.

Qiwen subsequently got a job as assistant professor of Asian business at INSEAD, the international business school in France whose faculty I had recently joined. With a couple more trips to China, Qiwen updated the three case studies from his thesis, and added a fourth on Great Wall Computer. In June 1999, he submitted a completed book manuscript to Oxford University Press entitled China's Leap into the Information Age: Innovation and Organization in the Computer Industry. Tragically, Qiwen died of liver cancer in August 1999. OUP published his book in 2000. My preface to the book became an obituary to a friend, student, colleague, and scholar.

Qiwen Lu and I published one journal article together, “The Organization of Innovation in a Transitional Economy: Business and Government in Chinese Electronic Publishing,” Research Policy, 30, 1, 2001: 35-54. We used the case of Founder, the pioneering company in Chinese electronic publishing, to illustrate the evolving relations between the state and enterprise in the process of China's development, focusing on the dynamics of the innovation process. Subsequently, I wrote an article, "Indigenous Innovation and Economic Development: Lessons from China's Leap into the Information Age," published in Industry and Innovation, 11, 4, 2004: 273-297, in which I interpreted Lu's findings from the four case studies in his book within a "social conditions of innovative enterprise" framework that stresses the importance of strategic control, organizational integration, and financial commitment in the innovation process. I then considered the implications of this interpretation of these case studies for comprehending the dynamics of indigenous innovation and the debates on economic development.

Globalization of the high-tech labor force:

Since the 1960s the development strategies of national governments and indigenous businesses in Asian nations have interacted with the investment strategies of US-based high-tech companies as well as US immigration policy to generate a global labor supply of educated and experienced high-tech labor. This process has entailed flows of US capital to Asian labor as well as flows of Asian labor to US capital. As a result, new possibilities to pursue high-tech careers, and thereby develop productive capabilities, have opened up to vast numbers of individuals in Asian nations. Many have found the relevant educational programs and work experience in their home countries. But many have gained access to education and experience by following global career paths that included study and work abroad, especially in the United States. For a nation in the process of development, these global career paths have posed a danger of “brain drain”: the career path could come to an end in the United States (or another advanced economy) rather than in the country where the individual had been born and bred. At that same time, for nations such as South Korea, Taiwan, China, and India that at certain stages of their development have experienced brain drain, the education and experience that their nationals have acquired abroad has created valuable “human capital” that can potentially be lured back home. A major challenge for these Asian nations has been the creation of domestic employment opportunities through a combination of strategic government initiatives, foreign direct investment (FDI), and the growth of indigenous businesses, that would enable the career paths of global nationals to be followed back home, thus transforming a potential “brain drain” into an actual “brain gain”. My research on this topic analyzes the interaction the key elements of the development dynamic that, based on investments in education “ahead of demand”, has enabled a number of Asian nations, including China, Hong Kong, India, Malaysia, Singapore, South Korea, and Taiwan, to experience rapid economic growth over the past quarter century or so.

Here is a recent version of a paper that lays out this perspective: Accumulating Education and Experience in the Global Economy 

A few years ago, as part of this project, with Bob Wayne Bell, Jr.,I did a number of case studies on the evolution of US-based ICT companies in China. Included were Hewlett-Packard, Intel, Microsoft, and Texas Instruments. Over the coming year, we intend to update these studies and add some more. These pieces of research demonstrate what can be done, using publicly available information (accessed mainly through subscription-based e-resources), to understand the accumulation of technological and organizational capabilities in China.

 

Here is the latest version of our study of HP China: Hewlett-Packard in China

China and India in the global economy:

For the past few years, I have been teaching a graduate course, China and India in the Global Economy, in the Department of Regional Economic and Social Development at the University of Massachusetts Lowell. Here is the current course description:

    In recent years and , with one-third of the world’s population, have emerged as powerhouses in the global economy.  How have they done it? How will they progress over the coming years? What are the implications for the rest of the global economy?

    An understanding of the rapid growth of and can provide lessons to poorer nations of the world about how they too can embark on dynamic development paths. Indeed, the comparison of Chinese and Indian development reveals dramatic differences between these two huge nations in terms of the forces that drive the development process. Besides asking questions about the pace of economic growth in each nation, we can also inquire into the financial and employment stability of the growth process as well as the equitability of the distributions of the gains from growth across the Chinese and Indian populations.

    And what are the implications of the economic growth of and for the economic performance in the advanced economies?  In principle, the people of an advanced nation such as the should be able to gain by the expansion of world trade that the development of and generates. In practice, however, even well-educated members of the labor force are finding that their counterparts in and are capable of working as productively as they are, but do so at much lower wages. In the 2000s companies have been offshoring massive amounts of work to and , thus contributing to the development of those nations. On the whole, workers in the could gain from this globalization of the labor force if US corporations would use the profits from globalization to invest in the upgrading of industrial capabilities at home.  With the fragile US economy still mired in crisis, Americans need to understand the dynamic development of China and India to recognize both the problems and possibilities of the momentous changes in the global economy that have been taking place.

I am teaching the course in the Fall 2009, and am currently revising the syllabus. I will post it soon. I will also be posting information on the team of people who I have working with me on China-related research at UMass Lowell in the areas of indigenous innovation, global competition, comparative corporate governance, and the finance of innovation. Works of mine that have been translated into Chinese: Corporate Governance and Industrial Development, co-authored with Mary O’Sullivan, a collection of essays published in Chinese, Peoples’ Post and Telecommunications Press, 2005. Competitive Advantage on the Shop Floor, Harvard University Press, 1990; translated into Chinese by Renmin University Press, 2006. International Encyclopedia of Business and Management Handbook of Economics, William Lazonick, editor, Thomson Learning, 2002; translated into Chinese, 2007. Indigenous Innovation and Economic Development: Lessons from China’s Leap into the Information Age Industry and Innovation, 11, 4, 2004: 273-298; translated into Chinese in Review of Political Economy (Renmin University of China), 2, 2006: 117-142.