Related yet diverging sectoral systems: telecommunications equipment and semiconductors in China

This study examines the histories of the telecommunications equipment and semiconductor industries in China from 1978¬–2012 to show that multiple factors determined their divergent trajectories from a similar starting point. We argue that these divergent trajectories are best understood using the sectoral systems framework based on three major building blocks: knowledge and technology, actors and networks, and institutions. More specifically, this article shows how, despite the fact that these two industries are highly inter-related, in one case the system worked to foster global competitiveness, while in the other case the system inhibited the formation of an innovative industry. This research contributes to the literature on industrial dynamics and innovation systems.