Business networks,social capital and the economic performance of creative and cultural industries: The case of Indonesia

This study examines the ways in which networking characteristics and practices influence the economic performance of creative and cultural industries. The notion of social capital is used to conceptualise the complex nature of networks, including both professional and social relationships that occur on multiple levels. This qualitative study is set in the context of Indonesia, in which two cases are examined: creative apparel entrepreneurs in Bandung and batik producers in Surakarta. The results show that regional environments provide opportunities for creative industries to find specialist suppliers, to gather market information and, importantly, to find and cross‐fertilise new ideas. Although regions provide these opportunities, the firms’ internal social capital is crucial in being able to internalise and transform the knowledge from the environment into innovative values embodied in their products.     

New Firm Formation and Industry Clusters: A Case of the Drugs Industry in the U.S.

The importance of new firms in regional growth led many scholars to probe the determinants of new firm formation. A close examination of cluster theory predicts that industry clusters can enhance new firm births as well as the productivity of existing firms. Linkages among firms and related institutions, which are the key characteritics of the cluster phenomenon, can serve as an important determinant of new firm formation. The network aspect of clusters helps nascent entrepreneurs find resources and information easier and faster than in an isolated environment. In addition, nascent entrepreneurs in industry clusters often have rich experience in existing local firms, which becomes important prior knowledge to explore new market opportunities. This study examines the effects of clusters on new firm formation. We found that the cluster based on knowledge sharing (i.e., knowledge–labor cluster) significantly affects the new firm formation process, whereas the cluster based on market transactions (i.e., value‐chain cluster) does not seem to play a role in new firm formation.     

Emerging geography of technological innovation in China's ICT industry: Region,inter‐firm linkages and innovative performance in a transitional economy

This study critically evaluates the relevance of the existing theory of technological innovation to the case of China's information and communications technology industry. Based on a large‐scale questionnaire survey conducted in China's three most important city‐regions, namely, Beijing, Shanghai and Shenzhen, where the core of China's information and communications technology industry is located, this study reveals a significant regional variation in technological innovation in a political economy undergoing marketisation and globalisation. This research has found no significant relationship between the innovative performance of firms and the extent of production linkages; nor was there a significant knowledge exchange among firms. A further analysis has identified the significant role played by government purchases, research and development capital input and export propensity in the process of technological innovation. The findings of this research cast doubts over the prevailing theory of ‘new economic geography’ in which soft and unbounded relational assets have been overemphasised at the expense of some solid and bounded actors and agents that are pivotal to technological innovation in a developing economy.     

Import–export nexus and China's emerging trade in environmental goods

International trade in environmental goods (EG) provides a market-based solution to balance the development–environment relationship. How can developing economies gain new growth opportunities through trade liberalisation in the EGs? This study investigates the structural features of products and firms during the early development of China's EG trade. This study defines the import–export nexus as the product relatedness between imports and exports at the firm level, which may promote the technology spill overs and firm cooperation. This study combines two nationwide data sets and constructs a data panel covering 334 prefectures and 248 EGs during 2001–2012. The conditional logit model with fixed effects is used for coefficient estimation. Empirical results reveal that the import–export nexus promotes new EGs in domestic sectors and export baskets, primarily supported by domestic private firms. The import–export nexus allows state-owned firms, which only represent a small market share, to enrich export baskets. It also helps foreign firms to develop new EGs in domestic sectors. These findings suggest revisiting the role of state-owned firms in industrial policy and developing a broad list of EGs to make use of the product relatedness. These will make developing economies like China gain new growth opportunities from the EG trade.     

The impact of foreign influence on exporting through open innovation

Foreign direct investment brings both increased competitive pressures and opportunities for domestic Small and Medium Sized Enterprises (SMEs). Competition may force them to seek new international markets, but also provide access to international customers. However, as economies become more knowledge-based in order to access international markets, SMEs must seek to innovate. This study examines how foreign firm presence and innovation influence the exporting activities of SMEs. It contributes to the existing literature by dividing innovation into product/process innovation and in-house/open innovation. With open innovation, products are more likely to be novel and productivity boosted to a larger degree. We interact different types of innovation with foreign influence to examine whether there is a moderating influence on the relationship. The individual firm level data and foreign influence data are from the Longitudinal Small Business Survey and Office for National Statistics. Whether firms are active exporters is explored using multilevel logit regressions. Both innovative activities and the foreign influence increase the likelihood of exporting. In-house product innovation boosts export propensity to a lesser degree in areas with higher levels of foreign influence. The hypothesis that open innovation has more impact on exporting activities when foreign influence is greater is not supported for either type of innovation.     

The Dynamic Firm–Territory Nexus of Taiwanese Informatics Industry Investments in China

ABSTRACT This article explores the transformation of industrial systems in transborder investments made by Taiwanese information technology investors in China. It asks how cross‐border firms would operate in these new territories. The study found that, by and large, Taiwanese investors chose to respond strategically to the tensions in different ways at different stages. At first, regarding China as a land of cheap labor and land, they relocated the Taiwanese industrial system in such a way as to avoid disturbing the hosting regions. The situation changed as China’s market emerged confidently and opened gradually to foreign investors after the mid‐1990s. Exploring this huge new market in China provided a mandate for Taiwanese investors to prosper. They opened up their firm boundaries and added new departments of research, development, and marketing. They developed from being merely export subcontractors to producing their own brand‐name goods. In the most recent stage, Taiwanese investors have created networks to tap into local resources to support new activities. Echoing Yeung (2005) in a recent issue of this journal, this article argues that new investments change the developmental trajectories of the host regions and, at the same time, the regions imbued the incoming firms with their own regional stamp. From this perspective, location and localization decisions by cross‐strait firms may be regarded as geographically sensitive strategies whereby firms, as reflexive agents, protect and reinforce their competence through the evolution of a firm–territory nexus.     

The Innovativeness and Heterogeneity of Foreign‐Invested High‐Tech Companies in Shanghai

China has taken a foreign direct investment‐based approach toward increasing its capital and knowledge base, and developing into an innovative economy. However, little quantitative evidence exists about the factors that drive innovations of foreign‐invested enterprises (FIEs) there. This paper uses survey data from high‐technology firms in Shanghai to discuss factors affecting their innovativeness. It takes the concepts of absorptive capacity, export orientation, and innovation‐related cooperation as a starting point. It highlights how the interplay of strategies and resources affects innovativeness and heterogeneity of FIEs. The most innovative FIEs are endowed with a strong human capital base and R&D activities, which at the same time target export markets and whose cooperative partners involve firms other than their parent company. The results underline the necessity to differentiate between the different types of FIEs when examining their innovativeness.     

Endogenous inclusive development of e-commerce in rural China: A case study

This paper advances understanding of the process and mechanism of endogenous inclusive development of information and communications technology (ICT) solutions. We present a case of a bottom of the pyramid (BoP) community in a rural area in China, which has achieved sustainable furniture e-commerce development independently. The case study demonstrates that e-commerce development in a disadvantaged area can start from a seed business model targeting a niche market with simple products, which will incur low costs and low skill requirements for entrepreneurs, and is thus able to scale up within local BoP community. In the second stage, BoP entrepreneurs must engage in intensive learning from the seed entrepreneur and other early movers to gain the required capabilities for operating the seed business model. In the last stage, BoP entrepreneurs need to focus on business model innovation and scoping, and form a local value chain and ecosystem for e-commerce development. Throughout the e-commerce development process, a seed entrepreneur plays specific critical roles at each stage. Practical implications for the BoP community to take advantage of ICT innovation to achieve sustainable development are given.     

Mapping Regional and Sectoral Characteristics of Knowledge‐Intensive Business Services: Evidence from the Province of Quebec (Canada)

ABSTRACT The study presents original evidence on the characteristic features and innovation activities of knowledge‐intensive business services (KIBS). Based on a wide‐scale survey of 1,124 KIBS firms in Quebec (Canada), we explore empirically the extent to which KIBS from various sectors and regions differ in their characteristics and their uses of innovation practices. The results from the sectoral analysis reveal that KIBS display different characteristic features and innovation behaviours across sectors, thus suggesting that inter‐sectoral differences are important when explaining innovation activities in KIBS. The comparison between KIBS in large, medium, central, and resource regions shows that the characteristic features and the innovativeness of KIBS are rather similar, and little or no significant statistical differences were found between the different regions in the province of Quebec. Thus, overall, the results of our study seem to suggest that a location does not tend to make a difference in respect to characteristic features and innovation performance of KIBS.     

The Role of Pre‐Entry Experience of Firm Founders in Peripheral Regions: Routines,Business Contacts,and Local Starting Conditions

This paper investigates how spinoffs in peripheral regions can profit from the work experience of their founders. More specifically, it discusses which firm routines and business contacts entrepreneurs gather through their prior work experience, and how this experience influences the organizational structure and orientation of the newly founded firm. The transfer of capabilities from parent firm to spinoff has been identified as important aspect of industrial clustering, but empirical evidence from peripheral areas is still sparse. It compares 22 semi‐structured interviews with founders of manufacturing firms from different peripheral regions in Switzerland to investigate whether routine and network transfer differs in varying peripheral contexts. The results show that not only inherited routines are important, but also inherited business contacts. Further, instead of simply reproducing acquired routines and networks, founders employ a mixture of continuity and change to find a good trade‐off between relying on well‐proven practices and introducing novelty. Finally, the geographical proximity of inherited business contacts seems to have an influence on the implementation strategy founders choose. Entrepreneurs with strong inherited local business contacts do not have to invest as much in building up new business contacts as those entrepreneurs in more isolated locations.     

Location and the Innovation Performance of Commercial GIS Companies

This paper looks at the role of firm size, location, and in‐house research and development (R&D) in the innovation performance of U.S. firms in the commercial geographic information systems (GIS) industry. Data from a survey of 300 GIS firms are presented. The results suggest that innovation‐intensity varies directly with in‐house R&D spending (scaled as a proportion of company sales), but inversely with company size (total employment). Significant regional variations in the innovation performance of GIS firms are identified. It is argued that the geography of innovation is influenced by the spatial distribution of young and/or small firms, in that R&D‐productivity is found to vary inversely with company size. An important finding is that creative inputs to support innovation are almost evenly divided between internal and external sources. A surprising result is that the academic community is not viewed as a particularly important source of new ideas for innovative firms. The paper concludes with a discussion of the implications of the survey data for future empirical work on the GIS sector.     

Market‐led options to scale up legume seeds in developing countries: Experiences from the Tropical Legumes Project

There are several hurdles to ensure sustainable seed production and consistent flow of improved legume varieties in sub‐Saharan Africa (SSA) and South Asia (SA). The unreliable demand, autogamous nature of most of the grain legumes, and slow variety replacement rate by smallholder farmers do not provide strong incentive for private seed companies to invest in legume seed business. Unless a well thought‐out and comprehensive approach to legume seed delivery is developed, current seed shortages will continue, eroding emerging market opportunities. The experiences reported here are collated through a 10‐year partnership project, the Tropical Legumes in SSA and SA. It fostered innovative public–private partnerships in joint testing of innovative market‐led seed systems, skills and knowledge enhancement, de‐risking private sector initiatives that introduced in new approaches and previously overlooked entities in technology delivery. As new public and private seed companies, individual seed entrepreneurs and farmer organizations emerged, the existing ones enhanced their capacities. This resulted in significant rise in production, availability and accessibility of various seed grades of newly improved and farmer demanded legume varieties in the target countries.     

Institutional varieties,governance quality,and firm-level innovation in emerging economies: Case of India

This study examines how institutional varieties at the subnational (state) level influence firm-level innovation in an emerging economy—India. Knowledge of how institutional varieties influence firm-level innovation is derived principally from country-level studies involving multiple developed countries. Research on emerging economies is sparse and tends to follow country-level approaches involving multiple countries. Research involving a single emerging economy where there are substantial institutional varieties between regions is thin. The institutional varieties of some emerging countries are so striking that they can be viewed as several countries within a country, for example, India, China. This study contributes to the innovation literature on the role of institutional varieties on firm-level innovation by focusing on a different level of analysis—a single, emerging economy with substantial institutional varieties across the different states of India. Innovation in emerging economies is a topic of increasing academic interest. A multilevel study involving regional- and firm-level factors is employed. Firm-level data are from the World Bank Enterprise Survey and regional-level data are from statistical agencies in India. The results confirm that institutional varieties have major impacts on firm-level innovation. The research, policy, and managerial implications are discussed.     

Technology Search and Firm Bounds in Biotechnology: New Firms as Agents of Change

Schumpeterian perspectives on industrial change suggest a relationship between new firms and the regionally specific technological bases for innovation. However, the links between such firms and the knowledge bases for innovation are more implicit than explicit. The innovation process in new firms reflects both the capabilities found within the firm as well as information sourcing from without. This paper seeks to articulate the nature of change in relationships between firms in science-based industries and the technological infrastructure accessed to support innovation, as such industries mature out of the birth phase. Innovation is treated as decision making, identifying the firm as innovator and agent of change. Survey research suggests that a shift in the sourcing of information, and an associated shift in the character of information accessed, occurred with maturation in the study industry, comprised of biotechnology firms in the U.S. “Early” and “later” forming firms show somewhat different technology sourcing patterns. Interviews were conducted to help interpret these findings. Implications for industry development are suggested.     

The E‐economy and the Rise of Technocapitalism: Networks,Firms, and Transportation

ABSTRACT The e‐economy is part of a larger phenomenon, technocapitalism, that is transforming business organizations and the ways in which they transact, produce, and ship their goods. Technocapitalism is an evolution of market capitalism that is rooted in technological innovation and supported by such intangibles as creativity and knowledge. This paper considers first the main characteristics of networks that support the e‐economy and its source phenomenon, the emergence of technocapitalism. Networks are thought to be the main vehicle through which the e‐economy spreads, and they have major effects on the organization of business firms. The culture of technocapitalism, with its emphasis on continuous innovation and rapid adjustment, is largely behind the rising importance of networks. A second section then considers the deconstruction of business firms and its relation to networks, the e‐economy, and the rise of technocapitalism. A historical perspective is provided to show the contrast with previous eras. The deconstruction of business organizations involves a major transformation of the norms and ways in which firms are run and structured. Finally, the likely implications for transportation and shipping of the rise of the e‐economy, its networks, and the deconstruction of firms are discussed. The logistics, pricing, and infrastructure of shipping are likely to be substantially affected by the spread of the e‐economy, its networks, and the deconstruction of firms.     

Determinants of entry: Evidence from new manufacturing firms in the U.S

The objective of this paper is to estimate the relationship between agglomeration economies and the birth of new firms in U.S. manufacturing sectors during 2004–2012. I examine the variations in Marshallian factors across MSAs and across counties within MSAs. My findings support the existence of Marshallian agglomeration forces: input sharing, labor market pooling, and knowledge spillovers, with input–output linkages particularly important. I then examine the variations in Marshallian factors across regions and find regional differences are not very strong. In addition, large-sized firms appear to be more responsive to a supplier-customer relationship. Moreover, my empirical results provide evidence that firms in highly concentrated industries react more to input linkage and labor pooling.     

Developing the Shanghai online games industry: A multi‐scalar institutional perspective

In recent decades, while place‐based policies and local development have attracted the interest of institutional economic geography, the issue of features of certain industries and how they are shaping and shaped by institutions at multiple spatial scales, has not been taken up sufficiently. This paper, based on a local creative industry—the Shanghai online games industry, which is an essential part of the new media sector, takes issue with it. It explores two aspects, namely how multi‐scalar institutions relate and influence the development of the online games industry in Shanghai and how local firms and entrepreneurs affect local and national institutions. It shows that the three aspects that are related to media sector in general and games industry in particular (i.e., cultural influence, technological significance, and economic value) matter much as they have resulted in diverse industry‐relevant policies and regulations devised by local and national states. Moreover, local firms and entrepreneurs with different capacities and characteristics also differ much in influencing the design of the industry‐specific institutions in the face of institutional voids.     

Innovation in the periphery: Compensation and exploitation strategies

Recent research has challenged the urban bias in economic geography and innovation studies, showing that highly innovative and competitive firms are also located in peripheral regions. So far, however, analyses has focused on how firms innovate despite their unfavourable location and little has been said about the innovation benefits of peripheral areas. Hence, this article identifies different compensation and exploitation strategies adopted by firms in order to overcome regional innovation constraints and to reap innovation benefits found in the periphery. Drawing on 20 in‐depth qualitative interviews with innovative firms situated in the Austrian periphery, our analysis reveals that innovation in peripheral regions is the outcome of a combination of compensation and exploitation practices. The uptake and composition of these strategies depend on the firm and regional characteristics, with firm size being the most influential factor.     

The persistence of inter‐regional hierarchy in technology transfer networks: An analysis of Chinese patent licensing data

This paper asks whether the technological development of a nation reduces the inter‐regional hierarchy in knowledge flow. We examine two scenarios that are the alternative to each other. The first is what we call the globalization of regional innovation system/weakening of inter‐regional hierarchy scenario: As many regions develop their niches in the global economy, the national “anchor” region loses its relative importance as the importer and distributor of new knowledge, rendering the domestic inter‐regional hierarchy less significant as a result. The second scenario is the globalization of national innovation system/persistence of inter‐regional hierarchy. The nation’s traditional anchor region becomes even more active in importing technology and distributing it to other regions of the country. To test which scenario is closer to reality, we employ social network metrics to analyse inter‐regional technology diffusion networks using Chinese patent licensing data for the 1998–2013 period. Our findings support the second scenario, showing that the influence of the traditional anchor region persists in the hierarchical network structure as new cities enter the network. We found five anchor regions: the three usual suspects—Beijing, Shanghai and Shenzhen—plus two that were slightly less expected—Dongguan and Suzhou.     

Threshold Firms: Innovation,Design and Collaboration in British Columbia's Forest Economy

This paper assesses the extent to which threshold firms have emerged within British Columbia's wood processing industries. Threshold firms comprise an innovative business segment and are growth oriented, larger than most small firms but not giant, locally owned, international in scope at least with respect to exporting, reliant on skilled, well paid employees, and that have developed knowledge‐based product market advantages. The analysis draws on an extended case study survey of 14 firms located in the lower mainland and Okanagan regions of British Columbia, and selected for their potential as threshold firms. The analysis examines six characteristics associated with threshold firms: size and ownership, internationalization, wood supply, labor relations, innovative design and collaboration, and local embeddedness. These firms reveal attributes of threshold firms, and the paper concludes by suggesting that an innovative forest policy for British Columbia could usefully focus on this type of firm.