Government Driven Model of Institutional Change Through Adoption of New Technology: A Case Study of the Failed Pharmaceutical Bidding and Procurement Platforms in China

Purpose – This paper reflects on the evolution of China's drug distribution industry from the planned economy era to the most recent dramatic shift, with a major focus on the analysis of the government's efforts of centralizing the drug distribution channel through adoption of e‐bidding platforms. In a broader sense, the Chinese government's effort is a showcase of the so‐called “Chinese model” of implementing institutional change: the government initiates a project and counts on its fiat to gain compliance and support from the involved stakeholders. The purpose of this paper is to analyse the limitations and problems of this mode of implementing institutional change.Design/methodology/approach – The analytical framework draws upon Williamson's theory of the mechanism of governance and insights from new institutional economics on institutional changes. The information used in this study is based on the authors' more than 40 interviews with a variety of pharmaceutical industry stakeholders, including gover...