Learning and innovation in a transitional economy: the rise of science and technology enterprises in the Chinese information technology industry

A number of Chinese science and technology enterprises have become extremely competitive. This paper explores the basis for learning and innovation in Stone Group, Legend Group and Founder Group. Their dynamism is found to be based upon extra-budgetary finance, access to the technology resources of the state, new forms of governance, strategies of integration between R&D, marketing and manufacturing and learning from foreign partners. The experience of these firms shows that privatization is not necessarily needed for innovation, and may actually impede development when technological resources are concentrated in state organizations.