The innovation gap is closing: Chinese state-owned enterprises’ mechanisms for developing innovative solutions

What is it about?

Based on surveys completed by 185 managers at state-owned enterprises (SOEs) and non-SOEs in China, we find that state ownership does not have a significant effect on innovation, suggesting Chinese SOEs may no longer be innovation-disadvantaged vis-à-vis non-SOEs. Additionally, both top management involvement and customer knowledge utilization are positively associated with innovation. The hypothesized magnifying effect of state ownership on top management involvement’s main effect on innovation is not present. Data support our expectation that state ownership amplifies the positive effect of customer knowledge utilization on innovation. Our research provides evidence that China’s SOEs are closing the competitive gap in innovation and mechanisms for this occurrence. We offer unique insights into factors affecting the innovative tendencies of Chinese SOEs and non-SOEs. Until now, little research has addressed what practices SOEs use to provide more innovative solutions to key customers.

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