Corporate governance, finance, and technological capability in newly industrialising economies : a framework and evidence from auto and electronics industries in China.

Based on empirical research in two of China's biggest and most important manufacturing
sectors: Auto and Electronics, this study develops an analytical framework to understand,
how firms in newly industrialising economies (NIEs) develop their technological
capabilities, and how this is affected by the situation of finance and the practice of
corporate governance (CG). Particularly, by further adaption of the theory to the Chinese
context, it attempts to answer the questions: 1) 'What is the situation of technological
capabilities in the firms in the Chinese Auto and Electronics Industries?'2) 'How has the
development process of technological capabilities been?' 3) 'What is the situation of
corporate governance and finance in Chinese Auto and Electronics firms?' and 4) 'How
can the capabilities developed be explained from the finance/corporate governance
aspect?'
Two frameworks are developed on the basis of previous research on technological
capabilities and corporate governance. Three Propositions are derived from these
frameworks. Five case studies are conducted in both sectors, and seven hypotheses are
then generated from the findings of case studies. They are tested through a questionnaire
survey of 195 firms in the Chinese electronics industry.
This thesis makes several theoretical contributions and has several policy implications.
Primarily, this study contributes to the literature on the development of technological
capability in NIEs by: 1) creating a better understanding of firm-level technological
capability in the Chinese auto and (especially) electronics sectors; 2) providing a thorough
account and explanations of how Chinese firms with typically flawed corporate
governance (CG) fail to develop dynamic capabilities; how those with better CG succeed,
and why there are not more of them. In addition this study has adapted the theoretical
framework (the effect of corporate governance on technological development) to the
Chinese situation and enriched it. It will enlighten future applications of such theory to the
wider context of NIEs in general. For policy makers, the crucial implication is that any
improvement in the governance factors studied in this study will significantly boost the
development of technological capability.