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Purpose

The purpose of this paper is to analyze the status quo of China's innovation systems and contribute to the development of effective innovation policies.

Design/methodology/approach

The construct of this paper is based on a comprehensive case study in China's transportation sector. Detailed discussions and analyses follow to give implications in policy making.

Findings

Sectoral innovation capability can be enhanced in a learning environment that balances domestic innovation and international technology transfer. Government should strategically leverage various resources for innovation.

Originality/value

Through the analysis of case study, a conceptual framework to support sectoral innovation is proposed. The research gives insight on how to improve and prepare the conditions for future innovation.

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