Strategic Alliances for Innovation in China

Abstract Despite widespread uncertainty and opportunism, limitations in factor markets and higher search costs for critical resources, a private sector is rapidly emerging in China with new business models, new organizational forms, and the development of new products and technologies. In this chapter we explore strategic alliances for innovation in the context of China by, first, reviewing extant literature and, second, exploring two illustrative cases. Alliances of Chinese private firms are understudied, despite the significance of domestic private firms in the economy and the widespread role of a variety of alliances in mitigating institutional shortcomings. We propose that the notion of alliance capability may be usefully employed in studying Chinese alliances. Furthermore, our cases suggest that the literature on alliances may incorporate institutional alliances as an element for explaining alliance capability in China’s emerging economy context.