The "Academy-run Enterprise" In China: A Governance Form Of Knowledge Industrialization

Chinese academic institutions (i.e. universities and public research institutes) used tosetup and run their own business firms (i.e. AREs). Furthermore, the AREs have playedan important role in the development of high-tech industries in China. More recently,however, people have been awakened to the fact that badly performing AREs canendanger the mother academic institutions. Simultaneously, pros and cons over the AREsand discussions on the ideal academy-industry relationship have been heated in China.This thesis departs from the notion that the Chinese AREs have already formed acritical mass that necessitates an in-depth study on them but existing related studies aredeficient in some way or other. First of all, many existing studies simply regard theAREs as equivalents of spin-off companies found in other (esp. advanced) countriesdespite significant differences between the two. Unlike spin-offs, the AREs usuallymaintain hierarchical and exclusive relationship (through a kind of umbilical cords) withtheir mother institutions. Thus, the author proposes to view AREs as spin-arounds ratherthan spin-offs.Another problem that the author tries to tackle in this study is the lack of suitabletheoretical framework for the discussion of the AREs and the academy-industryrelationship in China or in developing countries. The author contends that both the"Triple Helix" and the "New Economics of Science," which are two most representativetheoretical approaches to academy-industry relationship and to which many Chineseauthors have resorted for the evaluation of the AREs, are not actually suitable fordeveloping countries because they are based on the context of advanced countries. Thus,the author constructs a new conceptual framework that is applicable to developingcountries by synthesizing theories of the firm (esp. resource-based view of the firm) withthe literature of academy-industry relationship.This study's conceptual framework, which consists of a macro-level framework (i.e.a typology of various governance forms of knowledge industrialization) and a micro-level one (i.e. individual academic institutions' decision rule for setting up AREs), isbased on the core idea that the ARE is a governance form of "knowledgeindustrialization." The framework shows that AREs would emerge and grow whenacademic institutions have strong willingness to directly engage in economic activities,and their internal resources are strong, and the availability of alternative governanceforms of knowledge industrialization is low. Through historical, institutional, andempirical (based on the questionnaire for 102 CEOs of AREs) analyses, the author showsthat the three-factor (i.e. willingness, internal resource, availability of alternativegovernance forms) framework could successfully explain why the AREs emerged,prevailed, and eventually began to decline in China.Furthermore, the author extends the framework to discuss "forward engineering" (i.e.knowledge industrialization through AREs) along with other two distinct technologydevelopment strategies, i.e., "reverse engineering" and "inter-firm learning." Also, theauthor demonstrates that the three different technology development strategies areinnately interlinked with each other, because the "absorptive capacity" of existing firmsin a society is highly relevant to the feasibility of each of the three technologydevelopment strategies.With the extended framework, the author contrasts the evolutionary paths of China,Korea, Japan, Taiwan, US, and Latin American countries. Through the internationalcomparison the author finds that a specific type of academy-industry relationship per secould not serve as a general recommendation for developing countries. At the samecontext, the author concludes that the recent decline of the Chinese AREs per se isneither good nor bad news. Rather, it should be evaluated in relation to the feasibilitychanges in reverse engineering and inter-firm learning. Also, the author demonstratesthat China has not reached the level of absorptive capacity that newly industrializedcountries (e.g. Korea) have enjoyed during their periods of fast growth and suggests thatChina should enhance the absorptive capacity of the economy to cope with the changingenvironments.