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Networks and incentives in transition: a multi-level analysis of China's pharmaceutical industry

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This paper investigates the institutional and organizational sources of persistence and change in a product innovation system that brings new products to market in China's transition economy, focusing on the interaction between incentives and networks comprising that system. Even after two decades of economic reforms, the research institutes, manufacturers and wholesalers in many state-dominated industries have not moved significantly beyond their functional boundaries established decades ago under the Soviet-style command economy. A case study of the pharmaceutical industry shows that while may still be comprised of functionally-specialized organizations, the dynamics underlying this structure have changed dramatically with reforms. Further, organizaitons are beginning to pursue alternative strategies for creating and acquiring complementary assets, although these are not always in line with overall reform objectives and, in some case, lead to suboptimal system performance. Suggestions for further research are meant to extend our first steps towards applying network concepts to the analysis of transitional contexts like China.

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en

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application/pdf

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http://flora.insead.edu/fichiersti_wp/inseadwp2002/2002-04.pdf

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Copyright INSEAD. All rights reserved