Learning and innovation in a transitional economy: the rise of science andtechnology enterprises in the Chinese information technology industry

A number of Chinese science and technology enterprises have become extremel y competitive. This paper explores the basis for learning and innovation in Stone Group, Legend Group and Founder Group. Their dynamism is found to be based upon extra-budgetary finance, access to the technology resources of the state, new forms of governance, strategies of integration between R&D, marketing and manufacturing and learning from foreign partners. The experie nce of these firms shows that privatization is not necessarily needed for i nnovation, and may actually impede development when technological resources are concentrated in state organizations.