Strategic Network Orchestration in Emerging Markets: China's Catch‐up in the High‐Speed Train Industry
| Author | Huaichuan Rui,Olga Bruyaka |
| Published date | 01 January 2021 |
| Date | 01 January 2021 |
| DOI | http://doi.org/10.1111/1467-8551.12457 |
British Journal of Management, Vol. 32, 97–123 (2021)
DOI: 10.1111/1467-8551.12457
Strategic Network Orchestration in
Emerging Markets: China’s Catch-up in the
High-Speed Train Industry
Huaichuan Rui 1and Olga Bruyaka2
1School of Business and Management, Royal Holloway, University of London, Egham, Surrey, TW20 0EX,
UK 2John Chambers College of Business and Economics, West Virginia University,1601 University Avenue,
Morgantown, WV 26506, USA
Corresponding author email: huaichuan.rui@rhul.ac.uk
Transitioning from catch-up in production to catch-up in innovation capabilities is es-
sential to emerging market rms (EMFs) achieving internationalization and a competi-
tive advantage. While some EMFs are nowpositioned among the world’s most advanced
rms, many struggle to become independent innovators. Thus, understanding how EMFs
can develop internal absorptive capacity and progress towards catching up in innovation
capabilities remains important. Our study seizes this research opportunity and develops
a network-based explanation of catch-up, which complements existing technological and
organizational explanations. Specically, we address the question of ‘How does the or-
chestration of collaborative networks enable EMFs to catch up in production and inno-
vation capabilities?’ by describing an important yet under-researched process of strate-
gic network orchestration and showcasing the dynamic interdependencies between net-
work orchestration and organizational learning. Our study provides a detailed account
of Chinese high-speed train (HST) development from 1990 to 2020 and opens the possi-
bility for future researchon network orchestration in emerging market contexts. This pro-
vides EMF managers with a set of actionable network orchestration mechanisms that can
be used when designing and purposefully managing their strategic nets of domestic and
foreign partners.
Introduction
Emerging market rms (EMFs) have expanded,
with some ‘now becoming completely globalised
and taking their place among the world’smost ad-
vanced rms’ (Matthews, 2017, p. 769). Essential
to the success of EMFs’ internationalization and
competitive advantage achievement is the need to
progress from catching up in production capabil-
ities (i.e. being recipients of knowledge) to catch-
We appreciate the constructive suggestions for improve-
ment received from the editors of this special issue, Sumit
K. Kundu, Surrender Munjal and Somnath Lahiri, and
from the anonymous reviewers. Huaichuan Rui particu-
larly thanks everyone who helped her eldwork and ac-
cepted her interviews.
ing up in innovation capabilities (i.e. becoming au-
tonomous learners and producing innovation in-
ternally) (Hansen and Lema, 2019; Ray, Ray and
Kumar, 2017). Existing research drawingon the or-
ganizational learning perspective has primarily fo-
cused on two internal paths towards building inno-
vation capabilities: (1) the technological (centred
on knowledge bases) and (2) the organizational
(centred on forms of organizational specializa-
tion/differentiation, integration/coordination and
meta-level ‘orchestration’) (Bell and Figueiredo,
2012; Dutrenit, 2000). Similarly, along the orga-
nizational path, the springboard perspective (Luo
and Tung, 2007, 2018) suggests that orchestrating
knowledge transfer from abroad to home is im-
portant for building home-centred capabilities by
EMFs.
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98 H. Rui and O. Bruyaka
However, existing evidence highlights that many
EMFs have not successfully transitioned from
catch-up in production capabilities to that in in-
novation capabilities (e.g. Awate, Larsen and Mu-
dambi, 2012; Lee and Lim, 2001; Lessard, Teece
and Leih, 2016; Luo, Sun and Wang, 2011). This
suggests that some important but not yet fully
understood factors might be involved, such as
the challenges of conducting inter-rm coopera-
tion when partners come from different institu-
tional environments and the ability of cooperat-
ing rms to exploit their country-of-origin effects
to contribute to and gain advantages from coop-
eration (Kundu, Munjal and Lahiri, 2019). Our
study seizes the research opportunity to further
clarify the above-mentioned processes and fac-
tors and develops a network-based explanation of
catch-up in line with the British Journal of Man-
agement Special Issue’s call to foster newer and
relevant understanding of the processes that un-
derlie inter-rm cooperation in domestic and in-
ternational contexts (Kundu, Munjal and Lahiri,
2019). Specically, we address the question: ‘How
does the orchestration of collaborative networks en-
able EMFs to catch up in production and innovation
capabilities?’
Arm’scollaborative network denotes multiple
alliances, wherein multilateral transactions among
network members are facilitated by the network
(Lorenzoni and Lipparini, 1999). Collaborative
networks deliberately designed and purposefully
managed (i.e. network orchestration) are called
strategic nets (Möller and Rajala, 2007). We argue
that understanding the role of network orchestra-
tion in emerging markets is warranted for several
reasons. First, studies in the developed country
context showed that network orchestration is vital
for the innovation performance of organizations
(Dhanaraj and Parkhe, 2006; Nambisan and
Sawhney, 2011). Surprisingly, the role of EMFs as
orchestrators of their strategic nets has not been
studied.
Second, despite EMFs often drawing on mul-
tiple sources of external inputs in building their
innovation capabilities (Figueiredo, 2013; Hansen
and Lema, 2019), existing research has primarily
considered dyadic relationships between late-
comers and single, technologically advanced
suppliers of know-how and learning opportuni-
ties. In addition, existing studies generally have
not covered how rms absorb various types of
externally acquired knowledge through their
inter-organizational relations and transform such
knowledge into their own innovative capabilities
(Bell and Figueiredo, 2012).
Third, the literature on organizational learn-
ing of EMFs has largely focused on explaining
how EMFs develop external absorptive capacity
(AC), which is associatedwith catch-up in produc-
tion capabilities and entails recognizing the value
of new external knowledge and its assimilation,
transformation and exploitation for commercial
ends (Cohen and Levinthal, 1990; Todorova and
Durisin, 2007). Few studies have explored how
EMFs develop their internal AC, which is asso-
ciated with catching up in innovation capabilities
and focuses on active learning from outcome, cre-
ativity and exploration (Awate, Larsen and Mu-
dambi, 2012). While existing studies recognize the
importance of inter-organizational relations in de-
veloping both external and internal AC, whether
the same structure and management functions or-
chestrating these relationsis efcient for both types
of AC or how they change over time as the EMF
progresses with its catch-up strategies remains
unclear.
Our longitudinal case study of Chinese high-
speed trains (HSTs) in 1990–2020 highlights the
important role of strategic network orchestrationin
transitioning from catching up in production ca-
pabilities to catching up in innovation capabilities.
We dene strategic network orchestration as the
process wherein network orchestrator type, net-
work design and orchestration mechanisms con-
stantly change to meet the evolving strategic goals
of catch-up. Westudy strategic network orchestra-
tion at different levels of analysis: organizational
(the type and role of network orchestrator, internal
and external AC development and international-
ization) and inter-organizational(the nature of or-
chestration design and orchestration mechanisms,
relational embeddedness, etc.). We also discover
contextual factors at the country level (i.e. emerg-
ing market context) that help explain specic or-
ganizational and inter-organizationalfactors lead-
ing to catch-up.Specically, we found thatChinese
HST rms’ progress towards catching up in inno-
vation capabilitieswas accompanied by consolida-
tion via mergers of domestic network participants
and the transition of the network orchestrator role
from a governmentagency to the leading company
of the industry in China, CRRC Corporation Lim-
ited. This transition was also marked by network
design changes that evolvedfrom a solely domestic
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