Competition, capabilities, and the make, buy, or ally decisions of Chinese state-owned firms

What factors influence a Chinese state-owned enterprise's choice among alternative strategies for acquiring complementary assets? In this study, I propose that the decision to make, buy, or ally to acquire new product technology is an outcome of a firm's simultaneous consideration of external competitive and internal capabilities-related factors. Hypotheses derived from transaction cost, resource dependency, and organizational capabilities perspectives were tested in a sample of Chinese state-owned pharmaceutical firms. Predicted and unexpected results provide insights into these firms' behavior and allow refinement of these theoretical perspectives in light of China's economic reforms and its particular organizational and institutional environment.