Globelics Academy 2004
Evolution of the “Academy-run
Enterprises” in China:
An Organizational Approach
Jong-hak Eun
Ph.D. Candidate
Tsinghua University, Beijing, PRC
Brief Illustration on Start-up Firms
in China
• Many firms originated from academic institutions
• The top three PC makers are all AREs – Lenovo
(CAS), Founder (Peking Univ), Tongfang
(Tsinghua Univ).
• The 1st software company listed on the stock
market is also an ARE – Dongruan (Dongbei Univ)
(Cont.)
• There are more than 5000 university-run
enterprises (a subset of AREs) across the country.
– Among them, 1993 are categorized as S&T-based firms
• There are more than a thousand of academic
research institute-run enterprises.
• About 40 university-run enterprises are listed on
the stock markets in mainland China and Hong
Kong.
University-run Enterprises (UREs, a subset of AREs) listed on
the Stock Markets
Stock No.*
600076
600100
600136
600181
600255
600530
600601
600624
600657
600661
600701
600718
600730
600750
600797
600806
600846
600857
600892
Firm Title
Qingdao Huaguang
Tsinghua Tongfang
Daobo Gufen
Yunda Keji
Xinke Cailiao
Jiaoda Angli
Fangzheng Keji
Fudan Fuhua
Qingdao Tianqiao
Jiaoda Nanyang
Gongda Gaoxin
Dongruan Gufen
Zhongguo Gaoke
Jiangzhong Yaoye
Zheda Wangxin
Jiaoda Keji
Tongji Keji
Gongda Shouchuang
Huda Keji
The Major Stockholder
Beida Qingdao
Tsinghua Univ.
Saier Wangluo
Yunnan Univ.
Hefei Polytechnic Univ.
Shanghai Jiaotong Univ.
Peking Univ.
Fudan Univ.
Peking Univ.
Shanghai Jiaotong Univ.
Haerbin Polytechnic Univ.
Dongbei Univ.
36 Universities**
Jiangxi Chinese Medical Univ.
Zhejiang Univ.
Xian Jiaotong Univ.
Tongji Univ.
Haerbin Polytechnic Univ.
Hunan Univ.
4
150
532
537
551
590
790
836
915
925
938
988
990
H-418
H-618
H-8045
H-8095
H-8102
H-8106
H-8205
H-8231
Beida Gaoke
ST Maikete
Aohuadian
Nankai Gede
Keda Chuangxin
Ziguang Shengwu
Huashen Jituan
Tianda Tiancai
Shanda Huate
Zheda Haina
Tsinghua Ziguang
Huagong Keji
Chengzhi Gufen
Fangzheng Konggu
Fangzheng Shuma
Nanda Soft
Beida Qingdao
Fudan Weidianzi
Zheda Lande
Jiaoda Huigu
Fudan Zhangjiang
Peking Univ.
Peking Univ.
Shenzhen Tsinghua Univ.
Nankai Univ.
Chinese S&T Univ.
Tsinghua Ziguang
Chengdu Chinese Medical Univ.
Tianjin Univ.
Shandong Univ.
Zhejiang Univ.
Tsinghua Univ.
Huazhong S&T Univ.
Tsinghua Tongfang
Peking Univ.
Peking Univ.
Nanjing Univ.
Peking Univ.
Fudan Univ.
Zhejiang Univ.
Shanghai Jiaotong Univ.
Fudan Univ.
Existing Studies
• Those firms have been depicted in terms of…
– Private/Privately-run/Non-Governmental firms
• Stress different incentive mechanism from that in traditional Stateowned Enterprises
– Spin-offs
• At the same vein, Zhongguancun (Beijing), where many of those fi
rms are located, has often been called China’s Sillicon Valley
• In fact…
– They are not purely private
– They are “spin-arounds” rater than spin-offs
A New Concept
• “Academy-run Enterprise” which is different from “Spin-off”
• Differences
– Owned by the “academic institutions” rather than by some entrepreneuri
al individuals (faculties and graduates of academic institutions)
– Managerially controlled by the academic institutions
• Personnel, Profit sharing, Wages…
– Much stronger connection through a kind of “Umbilical cord”
• Almost exclusive rights to exploit tangible and intangible assets of mother i
nstitutions
• Def. of the Academy-run Enterprises (AREs)
– Firms that owned or managerially controlled by academic
institutions (universities or public research institutes)
Historical Development of the AREs
Great
Leap
Forward
Cultural
Revolution
1953 1958 1960
1st
Five
Year
Plan
1966
S&T
Reform
1977
Reform
Restoration
1985 1989
Nanxun
Jianghua
1992
Tian’anmen
2000
URE
reform
Research Questions
• Why…?
– Emergence (mid-1980s)
– Growth (1990s)
– Reform (since late 1990s)
Methodology
• Exploring publicized statistics on AREs
– Very few
• Semi-structured Interviews
– Top managers and staff members of AREs, University professors eng
aged in ARE formation, Directors of public research institutes, etc.
• Questionnaire Survey
– Identified 477 AREs which are affiliated to 67 major academic instit
utions, and sent out questionnaires for the CEOs of the firms.
– 102 sample
Theoretical Framework
Organizational (new institutional)
Approach
•
I suggest to view AREs as a “Governance Form”
of “Knowledge Industrialization”.
•
There exist various alternative forms of Knowle
dge Industrialization (e.g. joint research center,
short or long-term joint research contract,
technology exchange market, technology
licensing, science park, incubating center, and
education, etc.)
A Needed Modification
•
Theories of the Firm (i.e. Firm boundary theorie
s) can not be automatically applied to the issue
of Knowledge Industrialization
•
Extra Consideration: “Historically-formed
Social Contract” on the division of labor among
university, public research inst., and industrial fir
ms
Governance Forms of Knowledge Industrialization
Entrepreneurial
ARE
Tech
Sales
Spin-off
Firm
Patent
License
Science
Park
Joint
Research
Joint
Research
Center
More applied
Education
Purely Academic
Non-Entrepreneurial
Boundary Selection (TCE & RBV)
Hierarchical
Market-like
Historically formed Social Contract
Incubator
Micro-level framework to explain
the Origin and Evolution of the AREs
Micro-level framework:
Whether establish AREs or not?
TCE
Low
RBV
(Market Tr. Cost)
Strong
Strong
(Willingness)
( Rs .) Weak
Weak
Threshold
Basis of Actual Decision -making
(i)
( O , X)
(ii)
( O , O)
(iii)
( X , X)
(iv)
( X , O)
(v)
( X , X)
High
(vi)
( X , O)
Hypothetical Arguments
ARE: Why Emerged and Grew?
I.
Willingness to establish AREs
–
–
II.
Sociopolitical encouragement
pecuniary incentive
High Market Transaction Cost
–
–
III.
Weak Absorptive Capacity of firms
Underdeveloped Intermediary Institution
Strong Resource
–
–
–
Application-oriented research tradition
Umbilical Cord between academic institution and ARE (brand,
technology, human resource)
Underdevelopment of alternative forms of knowledge industrialization
ARE: Why Reform?
I.
I
Lowered Market Transaction
Cost (with variations across
sectors)
II.
Weakened Resources
Weak
More Focus on Academic
Research (Retreat from economic
activities)
Weak
–
Threshold
III. Changing Social Contract on the
Role of Academic Institutions
(Rs.)
Improved Intermediary Institutions
Strong
–
(Market Tr. Cost)
III II
(Willingness)
Enhanced Absorptive Capacity
Low
RBV
Strong
–
TCE
O
O
X
X
X
X
High
More jobs planned to be done
• Up to now, we have focused on so to speak Forwar
d Engineering (Lu, 2000).
– But there is other possible way of technological develop
ment, which is Reverse Engineering (Kim, 1997)
• Synthesize the discussions on forward and reverse e
ngineering.
• Develop more extended framework to compare diff
erent countries’ experiences (esp. developing countr
ies)
Conceptual Framework
RVS Eng.
&
Parallel
Learning
Rate of
RVS Eng.
& Parallel
Learning
FWD Eng.
RBV
Strg.
Threshold 1
TCE High
Low
Threshold 2
(Absorptive Capacity)
Low
(Market Tr. Cost)
High
Strg.
(O, X)
(O, O)
(Will (Rs.)
)
Weak
(X, X)
(X, O)
(X, X)
(X, O)
n.a.
Weak
Feasible Zones for Forward and Reverse
Engineering
Forward Engineering
through the AREs
Reverse Engineering
or Parallel Learning
(i)
(ii)
(i)
(ii)
(iii)
(iv)
(iii)
(iv)
(v)
(iv)
(v)
(iv)
International Comparison
& Policy Implications
(i)
(ii)
China**
(iii)
China*
(iv)
China
Korea,
Japan
(v)
?
Origin
(vi)
Present
Stage
Recent
Policy
Orientation
Thank you!