Challenges to the Promotion of Employee-Driven Innovation in State-Owned Enterprises: Two Cases from the Automotive Sector in China

Employee-driven innovations (EDIs) are increasingly regarded as one of main source of innovation and sustainable competitive advantage, yet many studies indicate that EDI are often undervalued in state-owned enterprises (SOEs) in China. It remains unclear what the challenges are to the promotion of EDIs in SOEs and how these challenges could be addressed with well-designed managerial practices such as a suggestion system. This study aims to address this research gap by studying two SOEs in the Chinese automotive industry using the multiple-case study method. A total of 12 respondents from the two SOEs have been interviewed as part of a four-year research project. On the basis of the analysis of two cases, it is found that SOEs that appointed a top-manager with firm-specific knowledge and long-term tenure successfully promoted EDIs with a well-designed supporting suggestion system in place. Conversely, the SOEs that appointed a top-manager with little firm-specific knowledge and short-term tenure have not successfully promoted EDIs and its suggestion system is also poorly designed. In conclusion, outsider control and short-term tenure of top manager are two major challenges to promote EDIs in SOEs. This study contributes to the literature by identifying the potential challenges of introducing EDIs and relevant practices in SOEs in China.