Business Innovation and Enterprise 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:

Business innovation and enterprise -- Innovation in China

The buzzword of today is represented by the internationalized economic crisis which has commenced from within the American real estate sector and soon expanded to impact all sectors across the entire globe. Before the emergence of the crisis however, the buzzword was that of globalization, understood as the process by which boundaries between states are gradually eliminated and the values, beliefs, cultures and resources of one region can easily transcend to another region.

Globalization has impacted all aspects of life, from the means in which one spends their leisure time to the means in which one completes their professional tasks. Globalization has generated effects on all fields of life, from politics, to economics and culture.

Within the business community, globalization has translated into a myriad of impacts. For once, the phenomenon allowed economic agents to transcend boundaries and benefit from the comparative advantage of other regions. In other words, they gained access to more natural resources and to cost effective labor forces. Then, companies were able to create, increase and consolidate international market shares.

Still, the advent of globalization has also materialized in increased competition in both the national as well as the international markets. Enhanced competition in turn has supported increasing customer demands, which ultimately materialized in urges for sustained development within the industry sectors. In such a setting then, it is believed that globalization has fostered development and innovation.

In the background of globalization, the current project sets out to assess the impacts of the phenomenon on the innovative activities of firms in China. In the pursuit of this objective, three different issues would be approached -- the features of the Chinese business environment, which could impact innovative activities; the industries with a potential for innovation and; the personal and critical view of whether investing in China would support innovation, followed by recommendations of how economic agents could overcome the shortages in the Chinese marketplace.

2. The Chinese business environment

China is one of the largest economies of the globe; its gross domestic product of $10,090 billion is only exceeded by that of the United States and the European Union. The Asian country has generically been an enclosed economy, focused on self sufficiency and rules through dynasties with focus on self and cultural preservation.

Three decades ago however, the country commenced a process of reform which liberalized its markets and prompted China as a notable trade partner. The reform program included elements such as the elimination of collectivized agriculture, the liberalization of prices, the decentralization of the fiscal institutions, privatization and the reduction of state intervention within the economy or the development of stock markets. The implementation of these reforms prompted China to become the largest exporter of the globe and the third largest global economy.

Still, in spite of these developments, China remains an emergent economy, which continually faces numerous problems. Some of the constant challenges for the Asian state include the high levels of national debts, corruption, environmental concerns and the assumed low quality of its exports (Central Intelligence Agency, 2011).

All of these features impact the economic climate at a general level, but also at the specific level of innovation. The lines below discuss some of the positive and negative features in the business environment and the means in which they impact innovation in firms.

2.1. Positive dimensions of innovation in China

There is a wide array of issues which create positive stances for innovation to be implemented by economic agents in China. Some of the more notable ones include the following:

The labor force

The cost efficiencies


Governmental support.

a) The labor force

The Chinese labor force is among the most cost effective ones in the world, and these low costs contribute significantly to attracting new investors in the country. But aside from actual investors, the cost effective labor force also stimulates innovation. Specifically, by creating cost efficiencies, the Chinese labor force allows economic agents to retain more in profits, which they can then reinvest in innovation. In other words, by working with the Chinese labor force, the domestic and international companies are better financially equipped to stimulate innovation.

b) The cost efficiencies

Additionally, aside from the actual costs of using Chinese labor force, this element also stimulates innovation at another level. Particularly, the Chinese labor force is highly flexible; it is accustomed to working long hours and adjusting itself to the needs of the employer / investor. This docile and disciplined labor force appeals to investors; supports innovation and economic growth (Park, Cai and Du). This finding is also consistent with that of Wuwei Li (2011), who found that the level of spending is a direct stimulator of innovation. In other words, due to cost efficiencies, economic agents operating in China possess more capitals to be reinvested in innovation.

c) Technologies

China is often perceived as a country focused on its labor force advantages and its export advantages, and playing a less important role within the technological field. Still, innovation is a primary determinant of innovation in China and the country does possess some technological advantages to support innovation within economic agents (Lin, 2007).

According to Adam Ashton (2010), China possesses superior technologies relative to the United States in terms of environmentally responsible advancements, with specific examples in the areas of energy generation and transportation. These specific technologic advancements of China include high voltage transmission, high-speed rail, advanced coal technologies, nuclear power, alternative energy vehicles, renewable energy, supercomputing, electric vehicle batteries or the conversion of sunlight into usable fuel.

d) Governmental support

Aside from labor force, cost efficiencies and technologies, innovation in China is also supported by other elements, including the support of government in innovation; this support is best materialized in the incentives offered by the Chinese governments to foreign investors and the support of the private business sector, as well as the superior protection of the intellectual property rights (The Economist, 2010).

2.2. Negative dimensions of innovation in China

The factors which foster innovation in China can generically be linked to new features and improvements generated throughout the extended reform process, such as new access to technologies or market liberalization. Still, the centralized and previously enclosed economy of China, coupled with some other new features in the country, also create negative stances for the generation of innovation by economic agents. These features include primarily the following:

The planning system

The competition

Other negative aspects.

a) The planning system

The planning system was traditionally a central one in China and this lacked the drive for innovation and change. In some of the larger size Chinese corporations, the planning system is still centralized. The organizational hierarchies are vertical and decisions are taken exclusively at the top. The focus on research and development is limited, as are the funds allocated to this department.

The resources for research and development are also widely controlled by the large size entities as well as by the state, with the small size entities revealing a restricted access to these resources. In other words, innovation is stifled in China as the state owned enterprises which have resources are not motivated to innovate, whereas the smaller, private companies which are motivated to innovate do not possess the necessary resources (Organization for Economic Co-operation and Development, 2002).

b) The competition

Within China, as well as within any other global market, innovation is fostered by competition. In other words, when a respective industry is highly stimulated by both consumer demands as well as producer supplies, that industry is more likely to evolve than an industry which is only supplied by one producer.

In the specific case of China, the levels of market competition are fairly low. The economic agents operate to create items and have them exported, so most of the competition is moved in the international arena, rather than in China. This fact is explained by the still low levels of purchase power in the country, which generate a reduced domestic demand. Specifically, the Chinese population has the 125th largest income per capita in the world, with an annual income of $7,600 per individual. Within the United States for instance, the income per capita is of $47,200 and it is of $32,700 within the European Union (Central Intelligence Agency, 2011).

Aside from the nature of the buyers, the competitive field in China is also revealing other shortages which stifle innovation.

"In China, many market imperfections distort competition. On the one hand, administrative intervention interferes with the functioning of the market mechanisms; on the other, improper and illegal competitive behavior and local protectionism hamper competition. Market institutions are still underdeveloped and effectively inadequate to regulate market behavior in China. […] This market environment has discouraged Chinese enterprises from undertaking R&D and other efforts to improve their product qualities and technical standing" (Organization for Economic Co-operation and Development, 2002).

c) Other negative factors of innovation in China

Aside from the planning system and market competition, the Organization for Economic Co-operation and Development also identifies…[continue]

Cite This Essay:

"Business Innovation And Enterprise" (2011, November 08) Retrieved December 4, 2016, from

"Business Innovation And Enterprise" 08 November 2011. Web.4 December. 2016. <>

"Business Innovation And Enterprise", 08 November 2011, Accessed.4 December. 2016,

Other Documents Pertaining To This Topic

  • 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

  • Innovation in Operations Management Throughout

    " The process feature revolves around "the general business process and practices that enable functional groups to operate effectively and collaborate toward a common goal - as well as a robust set of innovation methodologies and tools." Finally, the structure component has refers to the "organizational structures and supporting technologies that enable collaboration across functional lines" (Innovation Point, 2004). Otherwise put, the ophthalmologic clinic has to focus on implementing a

  • Business Plan for Solar and

    Mounted on the side of the pole are 2 solar panels made by F3 Solar that are capable of generating up to 80 W. Of power. -No lamp changes -- sealed for life. -Fully controllable with excellent colour rendition -Multi combination outputs. -Remote electronics. -LED Life expectancy -- 25 years + Prices vary by distributor Green Column ( / green_column.asp) The wind and solar powered solution delivers free, renewable energy which is stored in a battery ready

  • Innovations in Technology in Recent

    One such exemplary resource is Epicor's recent guide, "Managing Today's Professional Services Organization: How to Improve Efficiency and Increase Profits" (2011). Although the guide contains some self-serving information concerning Epicor's own IT product line, the bulk of the guide is devoted to timely and informative insights concerning how IT can facilitate project delivery in professional services organizations. For instance, according to Epicor's guide: Ultimately, a successful operational model demands higher-order

  • Business Processes of the Many

    There is another dimension to this methodology that doesn't show the overall value of the project as well. Figure 1: Revised Order Process Source: Kroenke, D.M. (2013). Using MIS (5th ed.). Upper Saddle River, NJ: Prentice Hall. Using value stream mapping in conjunction with a cross-department workflow approach to distributed order management planning and provide insights into the dollar value of the process improvements (Chan, Chung, Choy, 2006). A methodology more based

  • Strategic Benefits of Adopting an Enterprise Cloud Computing Platform...

    Business Systems Development The Strategic Benefits of Adopting an Enterprise Cloud Computing Platform Cloud computing platforms are enabling enterprises to attain faster time-to-market of new products, in addition to enabling higher levels of collaboration and communication with suppliers, stakeholders and partners externally. Enabling cost reductions through consolidation of legacy IT systems while increasing process efficiencies is delivering a positive Return on Investment (ROI) while also increasing customer responsiveness. The strategic benefits of

  • 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

Read Full Essay
Copyright 2016 . All Rights Reserved