The emergence of new technology enterprises in China: A study of endogenous capability building via restructuring

This article examines the emergence of a vital non‐state sector, consisting of New Technology Enterprises (NTEs) spun off from existing R&D institutions during the economic reforms in China. Most NTEs are engaged in computer and information technology. Based on an outline of the development of the NTEs, this article focuses on an analysis of a few critical aspects of the restructuring process through which the NTEs gained entry to a sphere of innovative economic activity. The analysis shows that, while the newly emerged NTEs have to have international levels of competitiveness, the restructuring process has been highly specific to the local society. The article concludes by stressing the critical importance of the organisational innovation of the economic actors and the creation of institutions to support creative economic activities, if developing countries are to cope with the pressing trends of rapid technological progress and economic globalisation.