IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v11y2019i23p6725-d291485.html
   My bibliography  Save this article

Does Distance Affect the Role of Nonlocal Subsidiaries on Cluster Firms’ Innovation? An Empirical Investigation on Chinese Biotechnology Cluster Firms

Author

Listed:
  • Xiyao Xiang

    (Economics and Management School, Xi’an University of Technology, Xi’an 710048, China)

  • Wei-Chiao Huang

    (Economics Department, Western Michigan University, Kalamazoo, MI 49008, USA)

Abstract

As translocation strategy has been pursued by cluster firms, two types of nonlocal subsidiaries, nonlocal manufacturing subsidiaries (NMS) and nonlocal R&D subsidiaries (NRS) contribute to their holding firms’ innovation in different ways. Prior studies have not paid much attention to the role of NMS and NRS, and how their effects are contingent on distance. To address this gap, this paper assesses the contribution of NMS and NRS on cluster firms’ innovation performance respectively and ascertains the moderating effect of geographical distance and social distance. The empirical investigation is conducted using a sample of 79 Chinese cluster firms. Our results indicate that both NMS and NRS have positively influenced cluster firms’ innovative performance. Moreover, geographical distance negatively moderates both the role of NMS and NRS. On the other hand, social distance only increases the influence of NRS on their holding firms’ innovation. Thus, spatial distance may hamper knowledge acquisition through NMS and NRS while loosely connected NRS would contribute more to their parent companies in local clusters. Our research contributes to the literature on cluster firms’ relocation strategy by clarifying the distinct role of NMS and NRS and recognizing the contingent effect caused by geographical and social distance.

Suggested Citation

  • Xiyao Xiang & Wei-Chiao Huang, 2019. "Does Distance Affect the Role of Nonlocal Subsidiaries on Cluster Firms’ Innovation? An Empirical Investigation on Chinese Biotechnology Cluster Firms," Sustainability, MDPI, vol. 11(23), pages 1-18, November.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:23:p:6725-:d:291485
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/11/23/6725/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/11/23/6725/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ho-Don Yan & Yu-Chen Kuo & Shan-Yu Chen, 2011. "Entrepreneurship and an Apprentice-based Cluster: The Evolution of Houli's Saxophone Cluster in Taiwan," Global Economic Review, Taylor & Francis Journals, vol. 40(4), pages 483-502, December.
    2. Ajay Agrawal & Iain Cockburn & John McHale, 2003. "Gone But Not Forgotten: Labor Flows, Knowledge Spillovers, and Enduring Social Capital," NBER Working Papers 9950, National Bureau of Economic Research, Inc.
    3. Manuela Presutti & Cristina Boari & Antonio Majocchi, 2013. "Inter-organizational geographical proximity and local start-ups' knowledge acquisition: a contingency approach," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 25(5-6), pages 446-467, June.
    4. Alexander Schmitt & Johannes Van Biesebroeck, 2013. "Proximity strategies in outsourcing relations: The role of geographical, cultural and relational proximity in the European automotive industry," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 44(5), pages 475-503, June.
    5. Geoffrey G. Bell & Akbar Zaheer, 2007. "Geography, Networks, and Knowledge Flow," Organization Science, INFORMS, vol. 18(6), pages 955-972, December.
    6. Safari, Aswo & Chetty, Sylvie, 2019. "Multilevel psychic distance and its impact on SME internationalization," International Business Review, Elsevier, vol. 28(4), pages 754-765.
    7. Adam B. Jaffe & Manuel Trajtenberg & Rebecca Henderson, 1993. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(3), pages 577-598.
    8. Anna Lejpras, 2015. "Knowledge, location, and internationalization: empirical evidence for manufacturing SMEs," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 24(8), pages 734-754, November.
    9. Roberta Capello & Alessandra Faggian, 2005. "Collective Learning and Relational Capital in Local Innovation Processes," Regional Studies, Taylor & Francis Journals, vol. 39(1), pages 75-87.
    10. Claudia Fuentes & Gabriela Dutrénit, 2016. "Geographic proximity and university–industry interaction: the case of Mexico," The Journal of Technology Transfer, Springer, vol. 41(2), pages 329-348, April.
    11. Hagedoorn, John & Cloodt, Myriam, 2003. "Measuring innovative performance: is there an advantage in using multiple indicators?," Research Policy, Elsevier, vol. 32(8), pages 1365-1379, September.
    12. Ash Amin & Patrick Cohendet, 2004. "Architectures of knowledge : Firms, capabilities, and communities," Post-Print hal-00279605, HAL.
    13. Julia Porter Liebeskind & Amalya Lumerman Oliver & Lynne Zucker & Marilynn Brewer, 1996. "Social networks, Learning, and Flexibility: Sourcing Scientific Knowledge in New Biotechnology Firms," Organization Science, INFORMS, vol. 7(4), pages 428-443, August.
    14. Geldes, Cristian & Felzensztein, Christian & Turkina, Ekaterina & Durand, Aurélia, 2015. "How does proximity affect interfirm marketing cooperation? A study of an agribusiness cluster," Journal of Business Research, Elsevier, vol. 68(2), pages 263-272.
    15. Elisa Giuliani, 2007. "The selective nature of knowledge networks in clusters: evidence from the wine industry," Journal of Economic Geography, Oxford University Press, vol. 7(2), pages 139-168, March.
    16. Goerzen, Anthony, 2018. "Small Firm Boundary-spanning via Bridging Ties: Achieving International Connectivity via Cross-border Inter-cluster Alliances," Journal of International Management, Elsevier, vol. 24(2), pages 153-164.
    17. Rune Dahl Fitjar & Andrés Rodríguez-Pose, 2014. "When local interaction does not suffice: sources of firm innovation in urban Norway," Chapters, in: André Torre & Frédéric Wallet (ed.), Regional Development and Proximity Relations, chapter 5, pages 195-222, Edward Elgar Publishing.
    18. M. S. Gertler & Y. M. Levitte, 2005. "Local Nodes in Global Networks: The Geography of Knowledge Flows in Biotechnology Innovation," Industry and Innovation, Taylor & Francis Journals, vol. 12(4), pages 487-507.
    19. Park, Jongyong & Lee, Hakyeon & Park, Yongtae, 2009. "Disembodied knowledge flows among industrial clusters: A patent analysis of the Korean manufacturing sector," Technology in Society, Elsevier, vol. 31(1), pages 73-84.
    20. Eric von Hippel, 1994. ""Sticky Information" and the Locus of Problem Solving: Implications for Innovation," Management Science, INFORMS, vol. 40(4), pages 429-439, April.
    21. Bellandi, Marco & Lombardi, Silvia, 2012. "Specialized markets and Chinese industrial clusters: The experience of Zhejiang Province," China Economic Review, Elsevier, vol. 23(3), pages 626-638.
    22. Harald Bathelt & Nina Schuldt, 2008. "Between Luminaires and Meat Grinders: International Trade Fairs as Temporary Clusters," Regional Studies, Taylor & Francis Journals, vol. 42(6), pages 853-868.
    23. Sánchez-González, Gloria & González-Álvarez, Nuria & Nieto, Mariano, 2009. "Sticky information and heterogeneous needs as determining factors of R&D cooperation with customers," Research Policy, Elsevier, vol. 38(10), pages 1590-1603, December.
    24. Ejermo, Olof & Karlsson, Charlie, 2006. "Interregional inventor networks as studied by patent coinventorships," Research Policy, Elsevier, vol. 35(3), pages 412-430, April.
    25. Chris Hendry & James Brown & Robert Defillippi, 2000. "Regional Clustering of High Technology-based Firms: Opto-electronics in Three Countries," Regional Studies, Taylor & Francis Journals, vol. 34(2), pages 129-144.
    26. Paul Almeida & Bruce Kogut, 1999. "Localization of Knowledge and the Mobility of Engineers in Regional Networks," Management Science, INFORMS, vol. 45(7), pages 905-917, July.
    27. Cassandra C Wang, 2015. "Geography of Knowledge Sourcing, Search Breadth and Depth Patterns, and Innovative Performance: A Firm Heterogeneity Perspective," Environment and Planning A, , vol. 47(3), pages 744-761, March.
    28. Muller, Eitan & Peres, Renana, 2019. "The effect of social networks structure on innovation performance: A review and directions for research," International Journal of Research in Marketing, Elsevier, vol. 36(1), pages 3-19.
    29. Peter J. Lane & Michael Lubatkin, 1998. "Relative absorptive capacity and interorganizational learning," Post-Print hal-02311860, HAL.
    30. Agrawal, Ajay & Kapur, Devesh & McHale, John, 2008. "How do spatial and social proximity influence knowledge flows? Evidence from patent data," Journal of Urban Economics, Elsevier, vol. 64(2), pages 258-269, September.
    31. Steinmo, Marianne & Rasmussen, Einar, 2016. "How firms collaborate with public research organizations: The evolution of proximity dimensions in successful innovation projects," Journal of Business Research, Elsevier, vol. 69(3), pages 1250-1259.
    32. Alessandro Muscio, 2006. "Patterns of Innovation in Industrial Districts: An Empirical Analysis," Industry and Innovation, Taylor & Francis Journals, vol. 13(3), pages 291-312.
    33. Peter Maskell & Anders Malmberg, 2007. "Myopia, knowledge development and cluster evolution," Journal of Economic Geography, Oxford University Press, vol. 7(5), pages 603-618, September.
    34. Nigel Lockett & Frank Cave & Ron Kerr & Sarah Robinson, 2009. "The influence of co-location in higher education institutions on small firms’ perspectives of knowledge transfer," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 21(3), pages 265-283, May.
    35. Buenstorf, Guido & Schacht, Alexander, 2013. "We need to talk – or do we? Geographic distance and the commercialization of technologies from public research," Research Policy, Elsevier, vol. 42(2), pages 465-480.
    36. Tuomo Alasoini & Asko Heikkilä & Elise Ramstad & Pekka Ylöstalo, 2008. "High‐involvement innovation practices at Finnish workplaces," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 57(6), pages 449-459, July.
    37. Gilbert, Brett Anitra & McDougall, Patricia P. & Audretsch, David B., 2008. "Clusters, knowledge spillovers and new venture performance: An empirical examination," Journal of Business Venturing, Elsevier, vol. 23(4), pages 405-422, July.
    38. Andrea Caragliu & Peter Nijkamp, 2016. "Space and knowledge spillovers in European regions: the impact of different forms of proximity on spatial knowledge diffusion," Journal of Economic Geography, Oxford University Press, vol. 16(3), pages 749-774.
    39. Adolf K.Y. Ng & Zaili Yang & Stephen Cahoon & Paul T.W. Lee & Winai Homosombat & Adolf K. Y. Ng & Xiaowen Fu, 2016. "Regional Transformation and Port Cluster Competition: The Case of the Pearl River Delta in South China," Growth and Change, Wiley Blackwell, vol. 47(3), pages 349-362, September.
    40. Ben Letaifa, Soumaya & Rabeau, Yves, 2013. "Too close to collaborate? How geographic proximity could impede entrepreneurship and innovation," Journal of Business Research, Elsevier, vol. 66(10), pages 2071-2078.
    41. Andre Torre, 2008. "On the Role Played by Temporary Geographical Proximity in Knowledge Transmission," Regional Studies, Taylor & Francis Journals, vol. 42(6), pages 869-889.
    42. Benner, Mary & Waldfogel, Joel, 2008. "Close to you? Bias and precision in patent-based measures of technological proximity," Research Policy, Elsevier, vol. 37(9), pages 1556-1567, October.
    43. Xiang, Xi-Yao & Cai, Hong & Lam, Shui & Pei, Yun-Long, 2013. "International knowledge spillover through co-inventors: An empirical study using Chinese assignees' patent data," Technological Forecasting and Social Change, Elsevier, vol. 80(1), pages 161-174.
    44. Antoncic, Bostjan & Hisrich, Robert D., 2001. "Intrapreneurship: Construct refinement and cross-cultural validation," Journal of Business Venturing, Elsevier, vol. 16(5), pages 495-527, September.
    45. Rune Dahl Fitjar & Andrés Rodríguez-Pose, 2014. "The geographical dimension of innovation collaboration: Networking and innovation in Norway," Urban Studies, Urban Studies Journal Limited, vol. 51(12), pages 2572-2595, September.
    46. Michelle Gittelman, 2007. "Does Geography Matter for Science-Based Firms? Epistemic Communities and the Geography of Research and Patenting in Biotechnology," Organization Science, INFORMS, vol. 18(4), pages 724-741, August.
    47. Nicolai J. Foss & Keld Laursen & Torben Pedersen, 2011. "Linking Customer Interaction and Innovation: The Mediating Role of New Organizational Practices," Organization Science, INFORMS, vol. 22(4), pages 980-999, August.
    48. Henny Romijn & Mike Albu, 2002. "Innovation, Networking and Proximity: Lessons from Small High Technology Firms in the UK," Regional Studies, Taylor & Francis Journals, vol. 36(1), pages 81-86.
    49. Yang, Monica & Hyland, MaryAnne, 2012. "Similarity in Cross-border Mergers and Acquisitions: Imitation, Uncertainty and Experience among Chinese Firms, 1985–2006," Journal of International Management, Elsevier, vol. 18(4), pages 352-365.
    50. Audretsch, David B & Feldman, Maryann P, 1996. "R&D Spillovers and the Geography of Innovation and Production," American Economic Review, American Economic Association, vol. 86(3), pages 630-640, June.
    51. Baba, Yasunori & Shichijo, Naohiro & Sedita, Silvia Rita, 2009. "How do collaborations with universities affect firms' innovative performance? The role of "Pasteur scientists" in the advanced materials field," Research Policy, Elsevier, vol. 38(5), pages 756-764, June.
    52. Pierre-Alexandre Balland, 2012. "Proximity and the Evolution of Collaboration Networks: Evidence from Research and Development Projects within the Global Navigation Satellite System (GNSS) Industry," Regional Studies, Taylor & Francis Journals, vol. 46(6), pages 741-756, September.
    53. Conlé, Marcus & Taube, Markus, 2010. "Anatomy of cluster development in China: The case of health biotech clusters," Working Papers on East Asian Studies 84/2010, University of Duisburg-Essen, Institute of East Asian Studies IN-EAST.
    54. Bar, Talia & Leiponen, Aija, 2012. "A measure of technological distance," Economics Letters, Elsevier, vol. 116(3), pages 457-459.
    55. Ojala, Arto, 2015. "Geographic, cultural, and psychic distance to foreign markets in the context of small and new ventures," International Business Review, Elsevier, vol. 24(5), pages 825-835.
    56. Tom Broekel & Ron Boschma, 2012. "Knowledge networks in the Dutch aviation industry: the proximity paradox," Journal of Economic Geography, Oxford University Press, vol. 12(2), pages 409-433, March.
    57. Jeongsik “Jay” Lee, 2010. "Heterogeneity, Brokerage, and Innovative Performance: Endogenous Formation of Collaborative Inventor Networks," Organization Science, INFORMS, vol. 21(4), pages 804-822, August.
    58. Thomas Klueter & Felipe Monteiro, 2017. "How Does Performance Feedback Affect Boundary Spanning in Multinational Corporations? Insights from Technology Scouts," Journal of Management Studies, Wiley Blackwell, vol. 54(4), pages 483-510, June.
    59. Leon Oerlemans & Marius Meeus, 2005. "Do Organizational and Spatial Proximity Impact on Firm Performance?," Regional Studies, Taylor & Francis Journals, vol. 39(1), pages 89-104.
    60. Ernest Miguélez & Rosina Moreno, 2014. "What Attracts Knowledge Workers? The Role Of Space And Social Networks," Journal of Regional Science, Wiley Blackwell, vol. 54(1), pages 33-60, January.
    61. Xavier Molina-Morales, F. & Belso-Martínez, José A. & Más-Verdú, Francisco & Martínez-Cháfer, Luis, 2015. "Formation and dissolution of inter-firm linkages in lengthy and stable networks in clusters," Journal of Business Research, Elsevier, vol. 68(7), pages 1557-1562.
    62. Ron Boschma, 2005. "Proximity and Innovation: A Critical Assessment," Regional Studies, Taylor & Francis Journals, vol. 39(1), pages 61-74.
    63. Stuart, Toby & Sorenson, Olav, 2003. "The geography of opportunity: spatial heterogeneity in founding rates and the performance of biotechnology firms," Research Policy, Elsevier, vol. 32(2), pages 229-253, February.
    64. Udo Staber, 2009. "Collective learning in clusters: Mechanisms and biases," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 21(5-6), pages 553-573, September.
    65. Mei, Liang & Zhang, Tao & Chen, Jin, 2019. "Exploring the effects of inter-firm linkages on SMEs' open innovation from an ecosystem perspective: An empirical study of Chinese manufacturing SMEs," Technological Forecasting and Social Change, Elsevier, vol. 144(C), pages 118-128.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lipeng Sun & Nur Ashikin Mohd Saat, 2023. "How Does Intelligent Manufacturing Affect the ESG Performance of Manufacturing Firms? Evidence from China," Sustainability, MDPI, vol. 15(4), pages 1-20, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ferretti, Marco & Guerini, Massimiliano & Panetti, Eva & Parmentola, Adele, 2022. "The partner next door? The effect of micro-geographical proximity on intra-cluster inter-organizational relationships," Technovation, Elsevier, vol. 111(C).
    2. Rune Dahl Fitjar & Franz Huber & Andrés Rodríguez-Pose, 2016. "Not too close, not too far: testing the Goldilocks principle of ‘optimal’ distance in innovation networks," Industry and Innovation, Taylor & Francis Journals, vol. 23(6), pages 465-487, August.
    3. Pierre-Alexandre Balland & José Antonio Belso-Martínez & Andrea Morrison, 2014. "The Dynamics of Technical and Business Networks in Industrial Clusters: Embeddedness, status or proximity?," Papers in Evolutionary Economic Geography (PEEG) 1412, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Apr 2014.
    4. Der-Shiuan Lee, 2018. "Towards Urban Resilience through Inter-City Networks of Co-Invention: A Case Study of U.S. Cities," Sustainability, MDPI, vol. 10(2), pages 1-23, January.
    5. Lazzeretti, Luciana & Capone, Francesco, 2016. "How proximity matters in innovation networks dynamics along the cluster evolution. A study of the high technology applied to cultural goods," Journal of Business Research, Elsevier, vol. 69(12), pages 5855-5865.
    6. Rosina Moreno & Ernest Miguélez, 2012. "A Relational Approach To The Geography Of Innovation: A Typology Of Regions," Journal of Economic Surveys, Wiley Blackwell, vol. 26(3), pages 492-516, July.
    7. Mariia Shkolnykova & Muhamed Kudic, 2022. "Who benefits from SMEs’ radical innovations?—empirical evidence from German biotechnology," Small Business Economics, Springer, vol. 58(2), pages 1157-1185, February.
    8. Christian Omobhude & Shih-Hsin Chen, 2019. "The Roles and Measurements of Proximity in Sustained Technology Development: A Literature Review," Sustainability, MDPI, vol. 11(1), pages 1-30, January.
    9. Broström, Anders, 2010. "Working with distant researchers--Distance and content in university-industry interaction," Research Policy, Elsevier, vol. 39(10), pages 1311-1320, December.
    10. Susanne Hinzmann & Uwe Cantner & Holger Graf, 2019. "The role of geographical proximity for project performance: evidence from the German Leading-Edge Cluster Competition," The Journal of Technology Transfer, Springer, vol. 44(6), pages 1744-1783, December.
    11. Grzegorz Micek, 2019. "Geographical Proximity Paradox Revisited: The Case of IT Service SMEs in Poland," Sustainability, MDPI, vol. 11(20), pages 1-18, October.
    12. Robert Huggins & Piers Thompson, 2015. "Entrepreneurship, innovation and regional growth: a network theory," Small Business Economics, Springer, vol. 45(1), pages 103-128, June.
    13. Ana Paula Faria & Natália Barbosa & Vasco Eiriz, 2015. "Firm Innovation and Co-Location in Portugal," Growth and Change, Wiley Blackwell, vol. 46(4), pages 574-592, December.
    14. Hervas Oliver,Jose Luis & Gonzalez,Gregorio & Caja,Pedro, 2014. "Clusters and industrial districts: where is the literature going? Identifying emerging sub-fields of research," INGENIO (CSIC-UPV) Working Paper Series 201409, INGENIO (CSIC-UPV).
    15. Boeker, Warren & Howard, Michael D. & Basu, Sandip & Sahaym, Arvin, 2021. "Interpersonal relationships, digital technologies, and innovation in entrepreneurial ventures," Journal of Business Research, Elsevier, vol. 125(C), pages 495-507.
    16. Blomkvist, Katarina & Kappen, Philip & Zander, Ivo, 2014. "Superstar inventors—Towards a people-centric perspective on the geography of technological renewal in the multinational corporation," Research Policy, Elsevier, vol. 43(4), pages 669-682.
    17. Ernest Miguélez & Rosina Moreno, 2016. "“Relatedness, external linkages and innovation”," IREA Working Papers 201603, University of Barcelona, Research Institute of Applied Economics, revised Apr 2016.
    18. Ron Boschma & Carlo Gianelle, 2014. "Regional Branching and Smart Specialisation Policy," JRC Research Reports JRC88242, Joint Research Centre.
    19. Hung, Shiu-Wan & Cheng, Min-Jhih & Hou, Chen-En & Chen, Nai-Rong, 2021. "Inclusion in global virtual teams: Exploring non-spatial proximity and knowledge sharing on innovation," Journal of Business Research, Elsevier, vol. 128(C), pages 599-610.
    20. Koen Frenken & Roderik Ponds & Frank Van Oort, 2010. "The citation impact of research collaboration in science‐based industries: A spatial‐institutional analysis," Papers in Regional Science, Wiley Blackwell, vol. 89(2), pages 351-271, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:11:y:2019:i:23:p:6725-:d:291485. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.