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The Technology Gap and the Growth of the Firm: A Case Study of China’s Mobile-phone Handset Industry

Discussion Papers


August 2009


We have examined the way in which local Chinese firms confronted with a technology gap have achieved growth, using the Chinese handset industry as a case study. Chinese local firms have lacked technology, and have therefore turned to outside firms for development, design, and manufacturing, while they themselves have focused on sales and marketing, using their advantage of familiarity with the Chinese market. Consequently, by establishing a growth condition in which their selection of boundaries counterbalances the technology gap they have been able to expand their market share in comparison with foreign firms.

Keywords: technology gap, boundaries of the firm, mobile-phone handset industry, China
JEL classification: D23, F23, O12

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