Determinants of Using Standards to Upgrade Chinese Industrial Structure From the Context of Sectoral System of Innovation

Standards have profound effects on industrial productivity, international trade, and economic growth. For latecomer countries such as China, standards, and standardization are an important means to upgrade their industrial structure. Using the framework of a sectoral system of innovation, this article leverages China's hardware industry to investigate the relationships among factors that influence the performance of industrial upgrading via standards. Expert opinions and the decision making trial and evaluation laboratory method are used to evaluate the relationships. The evaluation results show that if some firms in a system have the capability to execute standardization and innovation, with the support of the government to build and shape standardization institutions and infrastructures, the knowledge and technological capabilities of the entire industry can be enhanced, leading to the gradual introduction of high-quality standardized products into markets by firms even as they move toward more knowledge-intensive segments. This article contributes to two academic fields. First, standards are an important but often neglected topic in the innovation system literature. This article not only investigates the neglected topic but also explores the mechanism through which standards influence industrial upgrading at the meso-level. Second, several previous studies assumed that the drivers of supplier upgrades in developing countries are mostly driven by powerful buyer firms that are based in advanced countries. However, this article finds that customer requirement is not the most influential driver of the industrial upgrading of developing countries.