Technological Efforts, Technology Imports, Enterprise Size and Product Diversification: Experience of Chinese Machine-Building Industry.

China’s economic reforms, which started in the industrial sector during 1978, have to a greater extent changed the way in which state-owned industrial enterprises (SOEs) were managed. SOEs are given more and more autonomous powers with respect to their production. Among various autonomous powers is the power to enter into technological collaboration agreements with foreign technology suppliers. What is SOEs’ technological behaviour in terms of choosing foreign technology? What is the relationship between technology transfer and SOEs’ own technological effort? Does technology transfer discourage or encourage SOEs’ own technological effort? This study has examined the above questions with reference to the experience of SOEs in China’s machine-building industry. Based on a questionnaire survey, it was found that the main reasons for SOEs obtaining foreign technologies are the unavailability, immaturity and low quality of local technologies. The criteria for choosing between foreign technologies are their advanced stage, suitability and the reputation of technology suppliers. Logit analyses showed that the probability that an SOE stresses the unavailability factor increases with enterprise size. Multiple regression analyses suggested that technology imports, enterprise size and multiproduct production have a positive effect on in-house technological effort, which is measured by both research and development expenditures and patent statistics. However, larger SOEs were found to be less responsive to market signals for new technology