Contracting for Innovation: The difference in a case with fast-changing industrial background in China

Conventional contracting nowadays has disadvantages for fast-changing high-tech industries due to technology and market uncertainty. Observations found that cooperation between firms often operates in more innovative ways which were defined by Gilson et al. (2009) as ‘Contracting for Innovation’. However, their study was conducted in a developed market (i.e. the US) and thus the findings can hardly be used to explain what is observed in emerging markets which have significantly different industrial and market backgrounds. Using qualitative interviews from a case study, this paper aims to investigate contracting for innovation practices in a Chinese strategic alliance. Our findings suggest new functions compared to those in Gilson et al. (2009). This research has enriched ‘Contracting for Innovation’ theory against the background of emerging market with highly uncertain industrial environments.