Strategic Management on Lenovo

Topics: Personal computer, Chinese Academy of Sciences, Manufacturing Pages: 32 (10521 words) Published: August 22, 2013
Sequential learning in a Chinese spin-off: the case of Lenovo Group Limited Wei Xie1 and Steven White2
School of Economics and Management, Tsinghua University, Beijing 100084, China 2 INSEAD, France 1

This paper analyzes the learning process and sequential capabilities development in Lenovo, China’s most successful PC manufacturer, which originated as a spin-off from a governmentsupported research institute. The case study reveals this firm’s evolutionary, path-dependent and stage-wise progress from initial sales, distribution and service activities to manufacturing, product and process design and, finally developmental R&D. The study shows the interaction among the firm’s changing environment, its competitive strategy, and its set of resources and capabilities. The case has implications for research on such organizations, as well as implications for management.



he objective of this paper is to shed light on spin-off development and evolution in the Chinese context through an in-depth study of Lenovo Group Limited,1 the leading computer manufacturer in China that originated as a spinoff from a government-funded research institute. The case provides a basis for conceptualising the process by which an institute spin-off evolved from distribution and service-based business activities to become a highly successful, verticallyintegrated firm manufacturing products based on its proprietary technology. We are specifically interested in understanding the evolving nature of learning by which the firm’s managers were able to realize such a transition, and the implications for both research and practice. China, like other countries, has been searching for ways to generate and demonstrate economic impact from government-funded R&D organizations and university laboratories. As evidence of

the efficacy of its policies, the government will point to several successful spin-offs, including Lenovo, Tsinghua Tongfang and Beida Founder, who now play a significant role in China’s technology-based industries, especially information and data processing technology industries.2 While such spin-offs play a disproportionately large role in many of China’s high-tech industries as the locus of both technology development and its commercialisation, there are few studies that elucidate the process by which these spin-offs emerged and developed. Related studies address China’s R&D structures and mechanisms (Fischer, 1983), military technology transfer (Brockhoff and Guan, 1996), innovation policies (Huang et al., 1999), its national innovation system (Liu and White, 2001), issues facing government labs (De Boer et al. 1998), and the interaction between R&D and marketing in these firms (Li and Atuahene-Gima, 2001). These do not, however, address issues specific to the context of learning and strategic capability building in spin-offs. In developed 407

R&D Management 34, 4, 2004. r Blackwell Publishing Ltd, 2004. Published by Blackwell Publishing Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.

Wei Xie and Steven White country contexts, for example, the range of spinoff issues addressed includes factors affecting the performance of spin-offs (e.g., Dahlstrand, 1997), structures and strategies for spinning-off new companies (Roberts and Malone, 1996; Steffensen et al., 1999; Davenport et al. 2002), and techniques for stimulating spin-off creation (O’Gorman, 2003; Meyer, 2003) and managing the spin-off process (Carayannis et al., 1998). Our focus on learning and capabilities development in Chinese spin-offs links this study to the body of work that recognizes learning and capabilities development as a critical challenge for latecomer firms in developing countries, dislocated from centres of technological development (Gassmann and von Zedtwitz, 1998; Boutellier et al. 2002). Over the past two decades, a significant number of studies have examined...

References: 420
R&D Management 34, 4, 2004
r Blackwell Publishing Ltd. 2004
Sequential learning in a Chinese spin-off
r Blackwell Publishing Ltd. 2004
R&D Management 34, 4, 2004
R&D Management 34, 4, 2004
r Blackwell Publishing Ltd. 2004
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