Need for Speed- Exploring Swedish High-Tech Subsidiaries’ Innovation Process in China

Abstract

China has experienced an economic growth for many years, the Chinese market is dissimilar the Western market and therefore need to be approached in a different way. Major problems for Swedish subsidiaries are to understand the differences in the innovation process among different countries. Understanding the differences, firms can increase the success in their innovation process. Many Swedish companies have established subsidiaries in China and many of them started with just production, but have now established R&D activities. This research has investigated how senior managers in Swedish subsidiaries in the high-tech industry perceive the differences in the innovation process between Sweden and China. The purpose of this qualitative study of nine high-tech Swedish subsidiaries has been to explore the innovation process in a Chinese context, by using a grounded theory method. Throughout the study we discovered six characteristics that make the innovation process different in China. The innovation process is usually referred to as the process from idea generation to commercialization. In general, Swedish subsidiaries work with an iterative stage-gate model for their innovation processes, while their Chinese competitors focus more on commercialization of products and have an innovation process that is more linear. In China Swedish subsidiaries focus more on development than research. The Chinese market is changing fast and the overall pace in the innovation process is faster. At Swedish subsidiaries there are mainly Chinese employees and this have implications for the activities. There are less discussions and feedback among the employees, which is also a factor why the process in China goes faster and it is also common for Swedish subsidiaries to deal with a high employee turnover. The research also discovered due to the higher pace there are more trial and error and Chinese employees are more willing to take risk when they work in group.