Business Enterprise and Innovation in Essay

Download this Essay in word format (.doc)

Note: Sample below may appear distorted but all corresponding word document files contain proper formatting

Excerpt from Essay:

The "driving forces" that are fueling growth in the PHS industry are not unique, but they have been focused on an "innovation process [that] often leads to changes in market structure composed by varied players, and the appearance of novel services in the market" (Gao & Damsgaard 2007, p. 185). Not all industries have shared the positive experiences of the mobile telephone industry in China, though, and a number of obstacles and challenges remain firmly in place that tend to hamper innovative practices in China, and these issues are discussed further below.

Obstacles and Challenges to Innovative Practices

Obstacles and challenges to innovative practices can adversely affect an enterprise's two fundamental innovative activities, (a) product innovation and (b) process innovation (Lin & Lin 2010). Typically, higher product quality is related to higher production costs, while process innovation attempts to minimize such production costs (Lin & Lin 2010). In either case -- and given the enormity of the markets that are involved -- even small innovations can result in a huge savings and a solid competitive advantage for Chinese firms (Lin & Lin 2010). There are a number of factors that continue to hamper the innovative process in China, though. Currently, the Chinese government faces numerous general obstacles and challenges, including:

1. Reducing the country's inordinately excessive domestic savings rate which adversely affects domestic demand;

2. Sustaining adequate job growth for tens of millions of migrants and new entrants to the workforce;

3. Reducing corruption and other economic crimes;

4. Containing environmental damage and social strife related to the economy's rapid transformation; and,

5. Inflation remains a problem as well as the amount of debt incurred by local governments in their rush to jump on the economic development bandwagon in recent years (China 2011).

In this environment, it is reasonable to suggest that some types of industries will enjoy some advantage over others in terms of their ability to innovate and this has been the case in China in recent years. For example, according to Cliff, "The macroeconomic environment, competition, and factor markets provide mixed incentives for technological innovation in China. Some aspects of the macroeconomic environment stimulate technological development; while others inhibit it" (2001, p. 50).

The Chinese government's most recent emphasis on promoting the country's domestic market may in fact also end up backfiring on them despite the efforts of policymakers to maintain stability and continued economic growth. In this regard, Cliff also points out that, "The high economic growth rates China has been experiencing are a major stimulus, as they mean that the market for new or improved products is rapidly expanding. Growth rates have tended to fluctuate greatly, however, and uncertainty about the domestic economy may discourage innovation" (2001, p. 50). Likewise, Cliff (2001) cites the continuing problems with inflation that have defied government intervention that may discourage foreign long-term investment in technology-related initiatives.

Moreover, and although things have definitely changed for the better from just a few years ago (at least from the perspective of foreign investors), some degree of political instability has also discouraged technological innovation in China (Cliff 2001). According to Cliff (2001), foreign investors remain somewhat leery of the Chinese leadership's commitment to political stability as well as the long-term investments that are needed to bring new innovations to fruition and the global marketplace. In addition, an increasingly competitive marketplace also represents a challenge for the Chinese leadership with respect to the provision of incentives for technological innovation (Suttmeier 1997). Likewise, a number of industries in China already have significant incentives to export their products because this provides them with valuable access to foreign exchange and investments (Cliff 2001). Moreover, China's accession to the World Trade Organization in 2002 resulted in increased competition for the growing Chinese domestic market (Cliff 2001).

Based on their analysis of innovative practices by service and manufacturing firms in China, Lin and Lin (2010) report that the intensity of research and development (R&D) activities is positively related to innovation resulting in larger numbers of patent applications, but such intensity does not necessarily translate into higher numbers of valid patents. The analysis by Lin and Lin (2010) also showed that smaller manufacturing enterprises and larger service firms are more likely to actively pursue innovation compared to their larger and smaller counterparts, respectively (Lin & Lin 2010). The results of the Lin and Lin (2010) analysis also indicate that many Chinese firms' innovative activities are primarily hampered by economic and internal factors, and these are being recognized and addressed.


The research showed that China is well situated to build on its recent successes and many economists predict the country will become the leading global economy in the foreseeable future. Driving this economic growth has been a thoughtful (some would say overly cautious) approach to promoting economic development through innovative practices. Although China has much going for it in terms of a growing domestic market and a talented pool of younger professionals who will become the country's leadership in the years to come, the country is still constrained in its efforts to promote innovative practices as a result of several factors, including an export-dependent economy that is vulnerable to fluctuations in the global economy and massive local government debt that resulted from the rush to modernize its infrastructure.

Despite these obstacles, the research also showed that enterprises in China have taken the initiative to overcome such obstacles and even though innovative practices have proceeded in different ways from elsewhere in the world, innovation continues to drive the Chinese economy in several industries, including mobile telecommunications and other high-tech industries such as nanotechnology, life sciences, high-speed computing as well as fuel cell technologies. In the final analysis, scholars in the 22nd century will likely cite the first decade of the 21st century as the beginning of China's real economic development based on a free market philosophy where it is indeed "glorious to get rich."


Cheung, K-Y. (2007). 'The Impact of Ownership on the Propensity to Innovate in China's Large -- and Medium-Sized Industrial Enterprises.' China: An International Journal, vol. 5, no. 2,

pp. 228-231.

'China.' (2011). CIA World Factbook. [online] available: / publications/the-world-factbook/geos/ch.html.

'China quarterly update.' (2009, November). World Bank. [online] available: http://site


Cliff, R. (2001). The Military Potential of China's Commercial Technology. Santa Monica, CA:


Gao, P. & Damsgaard, J. (2007). 'A Framework for Understanding Mobile Telecommunications

Market Innovation: a Case of China.' Journal of Electronic Commerce Research, vol. 8,

no. 3, pp. 184-186.

Gu, S. (1999). China's Industrial Technology: Market Reform and Organisational Change.

London: Routledge.

Harris, L. & Dennis, C. (2002). Marketing the E-Business. London: Routledge.

Kriz, A. (2009). 'Doing Business in China: Tips for an Outsider.' China Review International, vol. 16, no. 1, pp. 1-3.

Lin, H-L. & Lin, E.S. (2010). 'FDI, Trade, and Product Innovation: Theory and Evidence.'

Southern Economic Journal, vol. 77, no. 2, pp. 434-437.

Simon, D.F. (2009). 'China's Future Have Talent, Will Thrive: Although the Chinese Clearly

Consider the Development of Their Human Resources to Be a Key to Economic

Development, the Details of the Path They Will Follow Remain Uncertain.' Issues in Science and Technology, vol.…[continue]

Cite This Essay:

"Business Enterprise And Innovation In" (2011, November 06) Retrieved December 11, 2016, from

"Business Enterprise And Innovation In" 06 November 2011. Web.11 December. 2016. <>

"Business Enterprise And Innovation In", 06 November 2011, Accessed.11 December. 2016,

Other Documents Pertaining To This Topic

  • Businees Enterprise and Innovation in

    As a consequence, the government created the National Innovation Agency. This agency focuses on ensuring collaboration between different important players in the innovative field in order to improve the results of innovative processes in Thailand. The most important sectors that the agency focuses on are represented by bio business, like biotechnology, bio-based materials, and natural products, and by energy and environment, design and branding. The strategic programs developed by the

  • Creative Business Practices Entrepreneurship Innovation and the

    Creative Business Practices: Entrepreneurship Innovation and the Relevance to the Modern Organization The work entitled "Globalization of Social Entrepreneurship Opportunities" reports that entrepreneurship " new and established companies is a major source of wealth and job creation, economic and technological growth and social transformation. This transformation is made possible by the powerful forces entrepreneurship unleashes, where ordinary people conceive innovative ideas, organize production, assume risk, and engage customers to accumulate wealth

  • Business Models Evolution of Business

    0 technologies ((Wirtz, Schilke, Ullrich, 2010) Heavily reliant on a broad range of integration points throughout an enterprise, creating a real-time information network using collaboration technologies including Facebook-like applications ( Chatter) Comparable in design objectives to the structure of the knowedlge-sharing ecosystem; yet this business model is based on real-time social media data and collaboration Ideal for large, knowledge-based businesses that are growing rapidly; perfect fit for new business ventures based on consulting

  • Business Report Compares the Two Australian Service

    Business report compares the two Australian service providers where by various aspects are critically looked at in respect to the design elements of a retail store environment. The elements are categorized into exterior facilities, general interior, store layout, interior displays and the social dimensions. Each of these design elements are categorically looked into differently taking into account the services being offered by the two chosen service providers namely Fadez Barbershop

  • Business Ethics Masters Business Administration Essay

    Business Ethics - Masters Business Administration Essay - Drawing relevant literature, critically evaluate a position debates firms responsibility maximising shareholder returns. Discuss implications chosen position a manager concerned impact company environment. Business ethics Throughout the past recent decades, the means in which the economic agents conduct their business operations have suffered some notable changes, in the meaning that less apparent emphasis comes to be placed on profits, and more on generating socio-economic

  • Business Intelligence Bi Plan Business

    Although intranet pages may provide links to the Internet, an intranet is not a site accessed by the general public" (Housel and Hom, 1999). Aside from the intranet, the company also uses a wide array of anti-virus programs, firewalls and virtual private networks. The scope of these software applications is that of screening the information which flows between all the organizational computers (Answers, 2011). At the level of the organization,

  • Enterprise Rent A Car S W O T Analysis Strengths

    These include: Used car sales Increasing trend of car sharing Weakened U.S. tourism industry ("Enterprise") The sale of used cars by other organizations is a significant threat to Enterprise. Many of the world's largest car manufacturers, like Daimler Chrysler, General Motors, and Ford, are offering large incentives and low interest financing through their dealers on new vehicle purchases. For this reason, it makes owning a new vehicle more affordable for more consumers and

Read Full Essay
Copyright 2016 . All Rights Reserved