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Policy support for own-brand innovation in China’s auto industry: panacea or placebo?

Dongjin Yang (School of Management, Jinan University, Guangzhou, China)
Chin Tachia (School of Management, Hangzhou Dianzi University, Hangzhou, China)
Liu Ren-huai (Institute of Innovation and Development, Hangzhou Dianzi University, Hangzhou, China and Research Center of Strategy Guanli, Jinan University, Guangzhou, China)
Zuowei Yao (Department of Management, Guangdong Institute of Public Administration, Guangzhou, China)

Chinese Management Studies

ISSN: 1750-614X

Article publication date: 3 April 2017

1703

Abstract

Purpose

China has become the world’s largest vehicle market, because of the strong governmental support to boost car sales and particularly because of the establishment of joint ventures between state-owned enterprises and world-class automakers. However, because many Sino-foreign joint ventures have performed unsatisfactorily in terms of creating indigenous brands, the purpose of this paper is to explore the cause-and-effect relationships among governmental policy support, Sino-foreign joint ventures and own-brand innovation in China’s passenger-car industry.

Design/methodology/approach

After briefly introducing the development history of the Chinese auto industry and reviewing relevant literature, first, the analytic hierarchy process method is used to create a unique, context-specific equation to measure the degree of policy support in China. This paper then uses the hierarchical multiple regression method to process the 2014 public data set.

Findings

The findings show that the degree of policy support increases the preference of the firms for producing foreign-brand cars, while such a relationship is fully mediated by the establishment of Sino-foreign joint ventures.

Research limitations/implications

The research brings greater and deeper insights into the interplay among governmental policy, the conduct of own-brand strategy and international joint ventures in China’s auto market, showing that policy support may not always be beneficial, but sometimes be detrimental to indigenous innovation.

Originality/value

This paper can be seen as an exciting step that adds to a better understanding of the role of political support in shaping the strategic choices of firms in terms of brand innovation in the Chinese automobile industry. The proposed novel, context-specific approach for evaluating the degree of policy support embodies the distinctive institutional complexity and intricate social network embedded in the local car market during the period of China’s socio-economic transformation – an approach that is original in this field.

Keywords

Acknowledgements

This study was supported by the Humanities and Social Science Foundation of the Ministry of Education of China (No.12YJA630167).

Citation

Yang, D., Tachia, C., Ren-huai, L. and Yao, Z. (2017), "Policy support for own-brand innovation in China’s auto industry: panacea or placebo?", Chinese Management Studies, Vol. 11 No. 1, pp. 107-122. https://doi.org/10.1108/CMS-12-2016-0254

Publisher

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Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited

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