China's Innovative Enterprises at the Frontiers: Lessons from Indigenous Innovation in Telecom-Equipment and Semiconductor Industries

Advanced semiconductors and telecommunication technologies are both critical high-tech industries for China's success in indigenous innovation, defined as the process of improving upon technologies learned abroad and generating sophisticated technologies indigenously. Leading Chinese companies in both industries, including Huawei in telecom equipment and Semiconductor Manufacturing International Corporation (SMIC) in semiconductor fabrication, have been thrust into geopolitics because of their success as innovative enterprises. Examining Huawei and SMIC's processes of indigenous innovation in the historical context of government policies and industry development paths, this article argues that strategic innovation investment and sustained organizational learning in innovative enterprise, enabled by autonomy in decision making, are the key to successes in indigenous innovation. This industry study may have implications for the developing countries in rethinking and adjusting their policy practices and theories of innovation transition.