This study systematically analyzes the impacts of supplier–client and technological linkages with foreign firms on domestic firm technological innovation, based on a unique dataset that was collected through a survey of over 600 firms in China's information and communication technology industry. The results revealed that Chinese firms were engaged in extensive supplier–client relationships with foreign firms, although their technological collaborations with foreign firms were very limited. It was found that firm innovation benefited significantly from technological relationships with foreign firms. However, the results also suggest that, although export/import did contribute to domestic firm innovation, supplier–client relationships with foreign-invested enterprises in China did not show positive effects on domestic firm innovation. The analyses further suggest that such market transactions between domestic and foreign firms helped building technological linkages between domestic firms and foreign firms. These results clearly demonstrate the value of networking in enhancing firm innovation in developing countries.
References
1.
AhujaG, 2000, “The duality of collaboration: Inducements and opportunities in the formation of interfirm linkages”Strategic Management Journal21317–343.
2.
AhujaGLampertC MTandonV, 2008, “Moving beyond Schumpeter: Management research on the determinants of technological innovation”The Academy of Management Annals21–98.
3.
AltenburgT, 2000, “Linkages and spillovers between transnational corporations and small and medium-sized enterprises in developing countries—opportunities and policies”, in MNC–SME Linkages for Development. Issues—Experiences—Best Practices. Proceedings of the Special Round on MNCs, SMEs and Development Ed. UNCTAD (UN, Geneva) pp 3–61.
4.
AltenburgTSchmitzHStammA, 2008, “Breakthrough? China's and India's transition from production to innovation”World Development36325–344.
5.
AnderssonUForsgrenMHolmU, 2002, “The strategic impact of external networks: Subsidiary performance and competence development in the multinational corporation”Strategic Management Journal23979–996.
6.
AngelD, 2002, “Inter-firm collaboration and technology development partnerships within US manufacturing industries”Regional Studies36333–344.
7.
AntoncicBProdanI, 2008, “Alliances, corporate technological entrepreneurship an firm performance: Testing a model on manufacturing firms”Technovation28257–265.
8.
ArkuG, 2002, “Collaboration in industry: Empirical findings among small electronics manufacturing firms in the Greater Toronto Area”GeoJournal57325–336.
9.
AwB YHwangA R, 1995, “Productivity and the export market: A Firm-level analysis”Journal of Development Economics47313–332.
10.
BaldwinJ RGuW, 2004, “Trade liberalization: Export-market participation, productivity growth, and innovation”Oxford Review of Economic Policy20372–392.
11.
BatheltHMalmbergAMaskellP, 2004, “Clusters and knowledge: Local buzz, global pipelines and the process of knowledge creation”Progress in Human Geography2831–56.
12.
BaumJACCalabreseTSilvermanB S, 2000, “Don't go it alone: Alliance network composition and startups' performance in Canadian biotechnology”Strategic Management Journal21267–294.
13.
BergerMRevilla DiezJ, 2008, “Can host innovation systems in late industrializing countries benefit from the presence of transnational corporations? Insights from Thailand's manufacturing industry”European Planning Studies161047–1074.
14.
BernardA BBradford JensenJ, 1999, “Exceptional exporter performance: Cause, effect, or both?”Journal of International Economics471–25.
15.
ChungSSinghHLeeK, 2000, “Complementarity, status similarity and social capital as drivers of alliance formation”Strategic Management Journal211–22.
16.
CoeN MHessMYeungHW-CDickenPHendersonJ, 2004, “ ‘Globalizing’ regional development: A Global production networks perspective”Transactions of the Institute of British Geographers, New Series29401–510.
17.
CoeN MDickenPHessM, 2008, “Global production networks: Realizing the potential”Journal of Economic Geography8271–295.
18.
ErnstDKimL, 2002, “Global production networks, knowledge diffusion, and local capability formation”Research Policy311417–1429.
19.
FelkerG B, 2003, “Southeast Asia industrialisation and the changing global production system”Third World Quarterly24255–282.
20.
FirnJ R, 1975, “External control and regional development: The case of Scotland”Environment and Planning A7393–414.
21.
FroebelFHeinrichsJKreyeO, 1980The New International Division of Labour (Cambridge University Press, Cambridge).
22.
GemündenH GHeydebreckPHerdenR, 1992, “Technological interweavement: A Means of achieving innovation success”R&D Management22359–376.
23.
GereffiG, 1999, “International trade and industrial upgrading in the apparel commodity chain”Journal of International Economics4837–70.
24.
GereffiGHumphreyJSturgeonT, 2005, “The governance of global value chains”Review of International Political Economy1278–104.
25.
GertlerM SLevitteY M, 2005, “Local nodes in global networks: The geography of knowledge flows in biotechnology innovation”Industry and Innovation12487–507.
26.
GibbonPPonteS, 2005Trading Down: Africa, Value Chains and the Global Economy (Temple University Press, Philadelphia, PA).
27.
GiroudA, 2000, “Japanese transnational corporations' knowledge transfer to Southeast Asia: The case of the electrical and electronics sector in Malaysis”International Business Review9571–586.
28.
GiulianiE, 2007, “The selective nature of knowledge networks in clusters: Evidence from the wine industry”Journal of Economic Geography7139–168.
29.
GorgHStroblE, 2001, “Multinational companies and productivity spillovers: A Meta-analysis”The Economic Journal111723–739.
30.
GrabherG, 1994, “The disembedded regional economy”, in Globalization, Institutions, and Regional Development in Europe Eds AminAThriftN (Oxford University Press, Oxford) pp 177–195.
31.
GulatiR, 1999, “Network location and learning: The influence of network resources and firm capabilities on alliance formation”Strategic Management Journal20397–420.
32.
HansenM WPedersenTPetersenB, 2009, “MNC strategies and linkage effects in developing countries”Journal of World Business44121–130.
33.
HardyJ, 1998, “Cathedrals in the desert? Transnationals, corporate strategy and locality in Wroclaw”Regional Studies32639–652.
34.
HoodNYoungS, 1982, “US Multinational R&D: Corporate strategies and policy implications for the UK”Multinational Business210–23.
35.
HugginsR, 2001, “Inter-firm network policies and firm performance: Evaluating the impact of initiatives in the United Kingdom”Research Policy30443–458.
36.
HymerS, 1976The Multinational Operation of National Firms: A Study of Direct Foreign Investment (MIT Press, Cambridge, MA).
37.
IvarssonIAlvstamC G, 2005, “Technology transfer from TNCs to local suppliers in developing countries: A Study of AB Volvo's truck and bus plants in Brazil, China, India, and Mexico”World Development331325–1344.
38.
KotabeMSwanK S, 1995, “The role of strategic alliances in high-technology new product development”Strategic Management Journal16621–636.
39.
LallS, 1980, “Vertical inter-firm linkages in LDCs: An empirical study”Oxford Bulletin of Economics and Statistics42203–226.
40.
LallSAlbaladejoM, 2004, “China's competitive performance: A Threat to East Asian manufactured exports?”World Development321441–1466.
41.
LiefnerIZengG, 2008, “Cooperation patterns of hi-tech companies in Shanghai and Beijing: Accessing external knowledge sources for innovation processes”Erdkunde62245–258.
42.
LiefnerIHennemannSXinL, 2006, “Cooperation in the innovation process in developing countries: Empirical evidence from Zhongguancun, Beijing”Environment and Planning A38111–130.
43.
LimLYCFongP E, 1982, “Vertical linkages and multinational enterprises in developing countries”World Development10585–595.
44.
LiuW DDickenP, 2006, “Transnational corporations and ‘obligated embeddedness’: Foreign direct investment in China's automobile industry”Environment and Planning A381229–1247.
45.
LiuX, 2008Globalization, Catch-up and Innovation (in Chinese) (Science Press, Beijing).
46.
LoweNKenneyM, 1999, “Foreign investment and the global geography of production: Why the Mexican consumer electronics industry failed”World Development271427–1443.
47.
PhelpsN A, 1996, “Collaborative buyer–supplier relations and the formation of centralised networks”Geoforum27393–407.
48.
PhelpsN AStillwellJCHWanjiruR, 2009, “Broken chain? AGOA and foreign direct investment in the Kenyan clothing industry”World Development37314–325.
49.
PoonJPHThompsonE R, 2003, “Developmental and quiescent subsidiaries in the Asia Pacific: Evidence from Hong Kong, Singapore, Shanghai, and Sydney”Economic Geography79195–214.
50.
Revilla DiezJBergerM, 2005, “The role of multinational corporations in metropolitan innovation systems: Empirical evidence from Europe and Southeast Asia”Environment and Planning A371813–1835.
51.
Revilla DiezJKieseM, 2006, “Scaling innovation in South East Asia: Empirical evidence from Singapore, Penang (Malaysia) and Bangkok”Regional Studies401005–1023.
52.
SalomonR M, 2002Spillovers to Foreign Market Participants: Assessing the Impact of Exporting and Firm Heterogeneity on Innovative Outcomes PhD thesis, Graduate School of Business Administration, New York University.
53.
SampsonR C, 2005, “Experience effects and collaborative returns in R&D alliances”Strategic Management Journal261009–1031.
54.
SayerA, 2004, “Industry and space: A Sympathetic critique of radical research”, in Reading Economic Geography Ed. BarnesT J (Blackwell Publishing, Malden, MA) pp 29–47.
55.
Scott-KennelJEnderwickP, 2005, “FDI and inter-firm linkages: Exploring the black box of the Investment Development Path (foreign direct investment)”Transnational Corporations14105–138.
56.
SimmieJ, 2004, “Innovation and clustering in the globalised international economy”Urban Studies411095–1112.
57.
StuartT E, 2000, “Interorganizational alliances and the performance of firms: A Study of growth and innovation rates in a high-technology industry”Strategic Management Journal212791–811.
58.
SturgeonT J, 2002, “Modular production networks: A New American model of industrial organization”Industrial and Corporate Change11451–496.
59.
SturgeonTvan BiesebroeckJGereffiG, 2008, “Value chains, networks and clusters: Reframing the global automotive industry”Journal of Economic Geography8297–321.
60.
SunY, 2000, “Spatial distribution of patents in China”Regional Studies34441–454.
61.
TavaresA TYoungS, 2006, “Sourcing patterns of foreign-owned multinational subsidiaries in Europe”Regional Studies40583–600.
62.
van BiesebroeckJ, 2005, “Exporting raises productivity in sub-Saharan African manufacturing firms”Journal of International Economics67373–391.
63.
von HippelE, 1978, “Successful industrial products from customer ideas”The Journal of Marketing4239–49.
64.
YeungHW-C, 2007, “From followers to market leaders: Asian electronics firms in the global economy”Asia Pacific Viewpoint481–25.
65.
YeungHW-C, 2009, “Regional development and the competitive dynamics of global production networks: An East Asian perspective”Regional Studies43325–351.
66.
YeungHW-COldsK, 2000Globalization of Chinese Business Firms (St Martin's Press, New York).
67.
ZhouYTongX, 2003, “An innovative region in China: Interaction between multinational corporations and local firms in a high-tech cluster in Beijing”Economic Geography79129–152.
68.
ZhouYSunYWeiYHDLinGCS, 2011, “De-centering ‘spatial fix’—patterns of territorialization and regional technological dynamism of ICT hubs in China”Journal of Economic Geography11119–152.
