The purpose of this essay attempts to set up a theoretical framework to elucidate the dynamics of technological choices and institutional innovations. Meanwhile, we take use of the theory to discuss the development experience of China’s IC industry. According to the analysis, the unsuccessful development of China’s IC industry is germane to two factors. On the one hand, the technology adopted by firms is inappropriate and it is incongruous with the resource endowment structure of Mainland China. On the other hand, Chinese government does not establish relevant institutional arrangements so as to adapt the borrowed technology to her resource endowment. We use some case studies to explain the outcome.
