Abstract
How many types of economic models and innovation systems exist and what are they? What is China’s basic position? An economic model or a business system is basically built upon a certain type of firm’s governance structure. Therefore, a certain type of firm’s governance structure corresponds to a certain type of business system or economic model. Every firm’s governance structure has a corresponding innovation pattern. Therefore firm’s governance structure is a basic concept that is used to define and to distinguish a certain type of economic model and its related innovation system. There are two basic types of economic models (the US leading liberal market economies and Germany leading coordinated market economies). Accordingly, there are two basic types of firm’s governance structure (market-based firm’s governance structure and coordinated firm’s governance structure). Market-based firm’s governance structure emphasizes the exclusivity of ownership boundaries, limits interfirm cooperation and employer–employee interdependence, shows free market mechanism determination. It leads to a market-oriented innovation system with price competitiveness. Coordinated firm’s governance structure encourages an overlap of ownership boundaries to share risks and to improve flexibility. It also encourages interfirm collaboration and employer–employee interdependence. These characteristics show nonmarket institutional coordination. It leads to a coordination-based innovation system with quality competitiveness. China provides an exceptional case for a dual-structured model and innovation system because it creates a clear “coordination boundary” between the two parts of the economy. The state sector is based on a coordinated firm’s governance structure, with a state strategic innovation system that is a coordination-based similar to but superior to the Germany leading European innovation system, while the private sector is built upon a market-based firm’s governance structure, with a market-oriented innovation system that is similar to the US innovation system. The dual-structured Chinese economy supports its dual convergence toward both types of advanced economy that contributes to its remarkable catching up. It also sparks its own engine for further innovation development. While the other economies are with only one type of innovation system and core competitiveness, China has two. The dual strength builds up the innovation powerhouse.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
References
Abegglen, J. C., & Stalk, G. (1985). Kaisha, the Japanese corporation. New York: Basic Books.
Abramowitz, M. (1986, June). Catching up, forging ahead, and falling behind. Journal of Economic History, 46, 385–406.
Aoki, M. (1987). The Japanese firm in transition. In K. Yamamura & Y. Yasuba (Eds.), The political economy of Japan (Vol. 1, pp. 263–288). Stanford, CA: Stanford University Press.
Aoki, M. (1988). Information, incentive and bargaining in the Japanese economy. Cambridge: Cambridge University Press.
Aoki, M. (1992). Decentralization-centralization in Japanese organization: A duality principle. In S. Kumon & H. Rosovsky (Eds.), The political economy of Japan: Culture and social dynamics, III (pp. 142–169). Stanford, CA: Stanford University Press.
Baumol, W. J. (1986). Productivity growth, convergence, and welfare: What the long-run data show. American Economic Review, 76(5), 1072–1085.
Baumol, W. J., Blackman, S. A. B., & Edward, N. W. (1989). Productivity and American leadership: The long view. Cambridge: MIT Press.
Baumol, W. J., & Edward, N. W. (1989). Three fundamental productivity concepts: Principles and measurement. In G. R. Feiwel (Ed.), Joan Robinson and modern economic theory (pp. 638–659). London: Macmillan.
Boyer, R. (1990, November–December). Economic et Histoire: Vers de nouvelles alliances? Annales ESC. (pp. 1397–1426).
Buechtemann, C. F. (1991). Does (de-)regulation matter? Employment protection in West Germany. In E. Matzner & W. Streeck (Eds.), Beyond Keynesianism, the socio-economics of production and full employment. Hants, UK: Edward Elgar Publishing.
Chandler, A. D. (1962). Strategy and structure. Cambridge: MIT Press.
Chandler, A. D. (1977). The visible hand: The managerial revolution in American business. Cambridge: Harvard University Press.
Chandler, A. D. (1990). Scale and scope. London: The Belknap Press of Harvard University Press.
Chandler, A. D., & Daems, H. (Eds.). (1980). Managerial hierarchies: Comparative perspectives on the rise of the modern industrial enterprise. Cambridge: Harvard University Press.
Cole, R. E. (1979). Work, mobility, and participation. Berkeley: University of California Press.
Cox, A. (1986a). State, finance and industry in comparative perspective. In A. Cox (Ed.), The state, finance, and industry. New York: St. Martin’s.
Cox, A. (1986b). The state, finance, and industry. New York: St. Martin’s.
Deeg, R. E. (1992). Banks and the state in Germany: The critical role of subnational institutions in economic governance. Ph.D dissertation, MIT.
Dore, R. P. (1986). Flexible rigidities. Stanford, CA: Stanford University Press.
Dyson, K. (1984). The state, banks, and industry. The West German case. In A. Cox (Ed.), State, finance and industry. Brighton: Wheatsheaf.
Esser, J. (1990). Bank power in West Germany revisited. West European Politics, 13, 17–32.
Friedman, D. (1988). The misunderstood miracle: Industrial development and political change in Japan. Ithaca, NY: Cornell University Press.
Fruin, M. (1992). The Japanese enterprise system. Oxford: Oxford University Press.
Gerlach, M. L. (1992). Alliance capitalism: The social organization of Japanese business. Berkeley: University of California Press.
Gerschenkron, A. (1962). Economic backwardness in historical perspective. Cambridge: Harvard University Press.
Gustafsson, B. (Ed.). (1990). Power and economic institutions: Reinterpretations in economic history. Aldershot: Edward Elgar.
Hage, J. (1980). Theories of organizations: Form, process, and transformation. New York: John Wiley.
Hall, P. A., & Soskice, D. (2001). Varieties of capitalism. New York: Oxford University Press.
Hollingsworth, J. R. (1997). Continuities and changes in social systems of production: The cases of Japan, Germany, and the United States. In J. R. Hollingsworth & R. Boyer (Eds.), Contemporary capitalism: The embeddedness of institutions. Cambridge: Cambridge University Press.
Hollingsworth, J. R., & Boyer, R. (1997). Coordination of economic actors and social systems of production. In J. R. Hollingsworth & R. Boyer (Eds.), Contemporary capitalism: The embeddedness of institutions. Cambridge: Cambridge University Press.
Hollingsworth, J. R., & Streeck, W. (1993). Performance and control of economic sectors. In J. R. Hollingsworth, P. Schmitter, & W. Streeck (Eds.), Governing capitalist economies: Performance and control of economic sectors. New York: Oxford University Press, Chapter 11.
Hollingsworth, J. R., & Streeck, W. (1994). Countries and sectors: Performance, convergence and competitiveness. In J. R. Hollingsworth, P. Schmitter, & W. Streeck (Eds.), Governing capitalist economies: Performance and control of economic sectors (pp. 270–300). New York: Oxford University Press.
Junne, G. (1989). Competitiveness and the impact of change: Applications of ‘high technologies’. In P. J. Katzenstein (Ed.), Industry and politics in West Germany (pp. 249–274). Ithaca: Cornell University Press.
Kocka, J. (1980). The rise of the modern industrial enterprise in Germany. In A. Chandler & H. Daems (Eds.), Managing hierarchies: Comparative perspectives on the rise of the modern industrial enterprise (pp. 77–116). Cambridge: Harvard University Press.
Koike, K. (1983). Internal labor markets: Workers in large firms. In T. Shirai (Ed.), Contemporary industrial relations in Japan (pp. 29–62). Madison: University of Wisconsin Press.
Koike, K. (1988). Understanding industrial relations in modern Japan. London: Macmillan.
Laudau, R., & Hatsopoulos, G. N. (1986). Capital formation in the United States and Japan. In R. Laudau & N. Rosenberg (Eds.), The positive sum strategy (pp. 583–606). Washington: National Academy Press.
Lazonick, W. (1991). Business organization and the myth of the market economy. Cambridge: Cambridge University Press.
Lazonick, W., & West, J. (1998). Organizational integration and competitive advantage. In G. Dosi et al. (Eds.), Technology, organization and competitiveness. Oxford: Oxford University Press.
Levine, S. B. (1984). Employers associations in Japan. In J. P. Windmuller & A. Gladstone (Eds.), Employers associations and industrial relations: A comparative study (pp. 318–356). Oxford: Oxford University Press.
Lincoln, J. R., & Kalleberg, A. L. (1990). Culture, control, and commitment: A study of work organization and work attitudes in the U.S. and Japan. Cambridge: Cambridge University Press.
Lincoln, J. R., & McBride, K. (1987). Japanese industrial organization in comparative perspective. Annual Review of Sociology, 13, 289–312.
Maddison, A. (1982). Phases of capitalist development. Oxford: Oxford Universtity Press.
Miyamoto, M. (1988). The development of business association in Prewar Japan. In H. Yamazaki & M. Miyamoto (Eds.), Trade associations in business history (pp. 1–45). Tokyo: Tokyo University Press.
Neuberger, H., & Stokes, H. (1974). German banks and German growth, 1883–1913: An empirical view. Journal of Economic History, 34, 710–731.
North, D. (1981). Structure and change in economic history. New York: Norton.
North, D. (1990). Insitutions, institutional change and economic performance. Cambridge: Cambridge University Press.
O’Brien, P. (1993). The steel industry of Japan and the United States. In J. R. Hollingsworth, P. Schmitter, & W. Streeck (Eds.), Governing capitalist economies: Performance and control of economic sectors (pp. 43–71). New York: Oxford University Press.
Ohno, T. (1989). L’esprit toyota. Paris: Masson.
Okimoto, D. I. (1986). The Japanese challenge in high technology. In R. Laudau & N. Rosenberg (Eds.), The positive sum strategy (pp. 541–567). Washington, DC: National Academy Press.
Reed, J. S., & Moreno, G. R. (1986). The role of large banks in financing innovation. In R. Laudau & N. Rosenberg (Eds.), The positive sum strategy (pp. 453–466). Washington: National Academy Press.
Sako, M. (1992). Prices, quality and trust. Cambridge: Cambridge University Press.
Schneiberg, M., & Rogers Hollingsworth, J. (1990). Can transaction cost economics explain trade associations? In A. M. Aoki, A. B. Gustafsson, & O. E. Williamson (Eds.), The firm as a nexus of treaties (pp. 320–346). London: Sage Publications.
Shigeyoshi, T. (Ed.). (1984). Industrial relations in transition: The case of Japan and the Federal Republic of Germany. Tokyo: The University of Tokyo Press.
Shirai, T. (Ed.). (1983). Contemporary industrial relations in Japan (pp. 267–291). Madison: University of Wisconsin Press.
Sorge, A., & Warner, M. (1986). Comparative factory organization. Aldershot: Gower.
Strath, B. (1993). The shipbuilding industries of Germany, Japan, and Sweden. In R. Hollingsworth, P. Schmitter, & W. Streeck (Eds.), Governing capitalist economies: Performance and control of economic sectors (pp. 72–96). New York: Oxford University Press.
Tilly, R. (1976). German banks, german growth and econometric history. Journal of Economic History, 36, 416–424.
Tilly, R. (1982). Mergers, external growth and finance in the development of large-scale enterprises in Germany, 1880–1913. Journal of Economic History, 42, 629–658.
Tilly, R. (1986). German banking, 1850–1994: Development assistance for the strong. Journal of European Economic History, 15, 113–152.
Tolliday, S., & Zeitlin, J. (Eds.). (1991). The power to manage: Employers and industrial relations in comparative historical perspective. London: Routledge.
Trevor, M. (Ed.). (1987). The internationalization of Japanese business: European and Japanese perspectives. Boulder: Westview Press.
Vitols, S. (1995a). German banks and the modernization of the small firm sector: Long-term finance in comparative perspective. Discussion Paper, FS-I-95-309. Berlin: Wissenschaftszentrum.
Vitols, S. (1995b). Inflation versus central bank independence? Banking regulation and financial stability in the U.S. and Germany. Discussion Paper, FS-I-95-312. Berlin: Wissenschaftszentrum.
Vitols, S. (1995c). Corporate governance versus economic governance: Banks and industrial restructuring in the U.S and Germany. Discussion Paper, FS-I-95-311. Berlin: Wissenschaftszentrum.
Vitols, S. (1995d). Are German banks different? Discussion Paper, FS-I-95-308. Berlin: Wissenschaftzentrum.
Vittas, D., et al. (1978). The role of large deposit banks in the financial systems of Germany, France, Italy, the Netherlands, Switzerland, Sweden, Japan, and the United States. London: Inter-Bank Research Organization.
Whitley, R. (1999). Divergent capitalisms: The social structuring and change of business systems. New York: Oxford University Press.
Williamson, J. G. (1991). Productivity and American leadership: A review article. Journal of Economic Literature, 29, 51–68.
Williamson, O. E. (1985). The economic institutions of capitalism. New York: Free Press.
Zysman, J. (1983). Governments, markets and growth: Financial systems and the politics of industrial change. Ithaca, NY: Cornell University Press.
Author information
Authors and Affiliations
Rights and permissions
Copyright information
© 2021 The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG
About this chapter
Cite this chapter
LIAO (廖春), C. (2021). Different Economic Models and Their Corresponding Innovation Systems: To Build the Way to Find China. In: The Governance Structures of Chinese Firms. Innovation, Technology, and Knowledge Management. Springer, Cham. https://doi.org/10.1007/978-3-030-52218-6_1
Download citation
DOI: https://doi.org/10.1007/978-3-030-52218-6_1
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-030-52217-9
Online ISBN: 978-3-030-52218-6
eBook Packages: Business and ManagementBusiness and Management (R0)