Digital Innovation: OrganizationalFoundation and Chinese Heterogeneity

Qu Yongyi*

Institute of Industrial Economics (IIE), Chinese Academy of Social Sciences (CASS), Beijing, China

Abstract: The advancement of digital innovation requires a distinctive organizationalstructure, different from those for non-digital innovation. The research literature, however,has confused appropriate forms of organization for digital innovation with those for nondigitalinnovation. Organizational heterogeneity, which is often overlooked in researchon digital innovation, determines a country’s core digital competencies. From a holisticperspective of corporate organization, industrial organization and innovation system, thisstudy has identified the unique organizational structure for digital innovation in Chinaby comparing organizational structures for digital and non-digital innovations. In termsof corporate organization, Chinese companies have intensified internal competition andcooperation to incentivize digital innovation in areas with mid- and short-term goals ofprofitability. In terms of industrial organization, multi-platform enterprises and diverse usecases may enhance economies of range and multi-path exploration of digital innovation.In terms of innovation system, administrative intervention in specific domains of thedigital economy may help to shape expectations of innovation entities and coordinate theirbehaviors.

Keywords: Digital innovation, country heterogeneity, corporate organization, industrial

JEL Classification Code: Q55, L16, L25

DOI: 10.19602/j.chinaeconomist.2023.05.01