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Agglomeration, absorptive capacity and knowledge governance: implications for public–private firm innovation in China

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  • Anthony Howell

Abstract

This paper considers the role of firm ownership structure, absorptive capacity and agglomeration on firm innovation in the Chinese context. A popular co-occurrence measure is used to measure local spillovers expected to take place between similar but different industries co-located together. Relying on a large panel of Chinese firms, this paper offers three main results: (1) privately owned enterprises (POEs) are more efficient innovators than their state-owned enterprise (SOE) counterparts; (2) local spillovers from related industries enhance firm innovation, especially for firms with higher pre-existing learning abilities; and (3) despite possessing relatively high levels of absorptive capacity, POEs maintain higher innovation performance compared with their SOE counterparts. These findings help confirm the absorptive capacity thesis, but also suggest that possessing relatively higher levels of absorptive capacity, in and of itself, is not always a sufficient precondition for firms to overcome all the cognitive and technological barriers to leveraging external sources of knowledge. In line with theories of knowledge governance, one explanation for this finding is that private (government) operators develop higher (lower) quality governance procedures that ultimately enhance (hamper) their ability to integrate successfully external sources of knowledge, even after developing a high level of absorptive capabilities.

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  • Anthony Howell, 2020. "Agglomeration, absorptive capacity and knowledge governance: implications for public–private firm innovation in China," Regional Studies, Taylor & Francis Journals, vol. 54(8), pages 1069-1083, July.
    • Handle: RePEc:taf:regstd:v:54:y:2020:i:8:p:1069-1083
    DOI: 10.1080/00343404.2019.1659505
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    Cited by:

    1. Xie, Xuemei & Han, Yuhang & Hoang, Thu Thao, 2022. "Can green process innovation improve both financial and environmental performance? The roles of TMT heterogeneity and ownership," Technological Forecasting and Social Change, Elsevier, vol. 184(C).
    2. Kopyrina, Olga & Wu, Kai & Ying, Zhanyu, 2023. "Greening through central inspection: The role of legitimacy pressure and risk-taking," Pacific-Basin Finance Journal, Elsevier, vol. 77(C).
    3. Rodríguez-Pose, Andrés & Zhang, Min, 2020. "The cost of weak institutions for innovation in China," Technological Forecasting and Social Change, Elsevier, vol. 153(C).
    4. Wang, Molin & Yan, Haifeng & Ciabuschi, Francesco & Su, Cong, 2023. "Facilitator or inhibitor? The effect of host-country intellectual property rights protection on China’s technology-driven acquisitions," International Business Review, Elsevier, vol. 32(6).
    5. Yang Gao, 2022. "The Belt and Road Initiative and cascading innovation in China’s domestic railway ecosystem," Journal of International Business Policy, Palgrave Macmillan, vol. 5(2), pages 236-258, June.
    6. Bartolomé Marco-Lajara & Eduardo Sánchez-García & Javier Martínez-Falcó & Esther Poveda-Pareja, 2022. "Regional Specialization, Competitive Pressure, and Cooperation: The Cocktail for Innovation," Energies, MDPI, vol. 15(15), pages 1-17, July.
    7. Su, Cong & Kong, Lingshuang & Ciabuschi, Francesco, 2022. "Innovativeness and the relevance of political ties in Chinese MNEs," Journal of Business Research, Elsevier, vol. 153(C), pages 494-508.
    8. Ning Ding & Kalimullah Bhat & Khalil Jebran, 2020. "Debt choice, growth opportunities and corporate investment: evidence from China," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 6(1), pages 1-22, December.
    9. Tangwei Teng & Yi Zhang & Yuefang Si & Jiayi Chen & Xianzhong Cao, 2020. "Government support and firm innovation performance in Chinese science and technology parks: The perspective of firm and sub‐park heterogeneity," Growth and Change, Wiley Blackwell, vol. 51(2), pages 749-770, June.

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