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R&D efficiency and Ownership: Evidence from the Biotechnology Sector in China

Berg, Mårten LU (2012) NEKN03 20121
Department of Economics
Abstract
In the west, out-innovating China has been a frequent proposal to deal with the feared threat posed by China’s rapid industrialization. However, China is not content with being only a manufacturing economy and has subsequently introduced multiple programs to foster research and development domestically. One of the most prominent sectors targeted by China’s programs and upheld by the west as their opportunity to shine is the biotechnology sector. But western biotechnology firms do not stay completely in the west; they have in recent years established research centres and development facilities in many Chinese cities. This enables a comparative analysis of the R&D efficiency between foreign firms and domestic firms, as well as joint ventures... (More)
In the west, out-innovating China has been a frequent proposal to deal with the feared threat posed by China’s rapid industrialization. However, China is not content with being only a manufacturing economy and has subsequently introduced multiple programs to foster research and development domestically. One of the most prominent sectors targeted by China’s programs and upheld by the west as their opportunity to shine is the biotechnology sector. But western biotechnology firms do not stay completely in the west; they have in recent years established research centres and development facilities in many Chinese cities. This enables a comparative analysis of the R&D efficiency between foreign firms and domestic firms, as well as joint ventures and state-owned enterprises. Institutional theory suggests that industry such as biotechnology where innovation works parallel with development should benefit from lower government involvement. This hypothesis is tested through a non-parametric data envelopment analysis for the different ownership types present in China. Using both constant returns to scale (CRS) and variable returns to scale (VRS); foreign enterprises, private firms and firms with investments from Hong Kong and Taiwan were found to be technically efficient under both CRS and VRS. State-owned enterprises were found to be less scale efficient while exhibiting increasing returns to scale. (Less)
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author
Berg, Mårten LU
supervisor
organization
course
NEKN03 20121
year
type
H1 - Master's Degree (One Year)
subject
keywords
Data envelopment analysis, Biotechnology, R&D efficiency, China, Ownership
language
English
id
3054014
date added to LUP
2012-09-27 10:39:41
date last changed
2012-09-27 10:39:41
@misc{3054014,
  abstract     = {In the west, out-innovating China has been a frequent proposal to deal with the feared threat posed by China’s rapid industrialization. However, China is not content with being only a manufacturing economy and has subsequently introduced multiple programs to foster research and development domestically. One of the most prominent sectors targeted by China’s programs and upheld by the west as their opportunity to shine is the biotechnology sector. But western biotechnology firms do not stay completely in the west; they have in recent years established research centres and development facilities in many Chinese cities. This enables a comparative analysis of the R&D efficiency between foreign firms and domestic firms, as well as joint ventures and state-owned enterprises. Institutional theory suggests that industry such as biotechnology where innovation works parallel with development should benefit from lower government involvement. This hypothesis is tested through a non-parametric data envelopment analysis for the different ownership types present in China. Using both constant returns to scale (CRS) and variable returns to scale (VRS); foreign enterprises, private firms and firms with investments from Hong Kong and Taiwan were found to be technically efficient under both CRS and VRS. State-owned enterprises were found to be less scale efficient while exhibiting increasing returns to scale.},
  author       = {Berg, Mårten},
  keyword      = {Data envelopment analysis,Biotechnology,R&D efficiency,China,Ownership},
  language     = {eng},
  note         = {Student Paper},
  title        = {R&D efficiency and Ownership: Evidence from the Biotechnology Sector in China},
  year         = {2012},
}