Growth of the Firm and Economic Backwardness: A Case Study and Analysis of China's Mobile Handset Industry

Discussion Papers


by KIMURA Koichiro

December 2007


Economic backwardness often influences the growth of firms in developing countries. In this paper, we investigate the growth conditions and paths available for latecomers competing with first movers. Employing the concepts of boundaries of the firm and the disadvantage of backwardness, we present a case study of China's mobile handset industry and proceed to develop a simple model. We find that although significant disadvantage does not allow latecomers to grow, there are possibilities for changing the conditions of growth if latecomers can utilize outside resources and/or indigenous advantages.

Keywords: Boundaries of the Firm, Backwardness, Mobile Handset, China
JEL classification: D23, L63, O12, O53

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