Relationship Between Cooperation Networks And Innovation Performance Of High-tech Enterprises In Cluster

Although enterprise innovation is an important engine of industrial upgrading and economic development, influential factors of innovation capability and performance remain controversial. With the advent of the knowledge economy and the increasing complication of technological innovation, more and more scholars realize that companies need to acquire external knowledge out of the firm boundary through establishing relationships and linkages with other firms facilitate innovation. While, Economic Geographers emphasize that industrial clusters and geographical proximity play a significant role in knowledge transfer among clustering enterprises, open innovation theory initiated by management scientists focuses on the importance of different knowledge networks on innovation. However, whether geographical proximity, clusters and different types of knowledge-based collaborative networks can promote innovation still remains vague and controversial. As an important part of the information industry, software industry has become a basic, pilot and strategic industry in national economic and social development. Therefore, the thesis investigates the dynamics of innovation of the software firms in Hangzhou, one of the most developing cities in China. It pays special attention to the relationship of geographic proximity and innovation, as well as the importance of external knowledge exchanges with peers, suppliers, customers and universities/research institutes on firm innovation.With the secondary statistical data from economic census yearbooks, and government internal reports as well as the first-hand data and information from questionnaire survey and face-to-face in-depth interviews on the software firms in Hangzhou, the thesis systematically explores the influences of geographic concentration and collaboration networks on software firms’ innovation. It is found that Hangzhou software firms have a strong inclination to geographic concentration and there are intensive interaction between software firms and clustering suppliers, customers and universities. However, the cooperation networks of software firms with peers, suppliers, universities fail to promote enterprise innovation. Although customers are identified as a significant source of innovation, software firms cannot be innovative without the internal R&D investment. This indicates that internal R&D is key to innovation, and the external knowledge exchange and linkages is only important supplement. Due to the lack of intellectual property rights protection, there is no mutual trust relationship between firms and their peers and therefore no knowledge-based interactions are found. It is very interesting to note that suppliers do not contribute to innovation either. Two explanations can be obtained from the interview. First of all, suppliers of software firms only provide basic service and equipment without much advanced knowledge. More importantly, a number of suppliers extend their business downstream and hence turn out to be the competitors in the end. Software firms are wary in knowledge exchange with suppliers. Since most of the surveyed software companies are market- and customer-oriented, the frequent communication with customers contributes to a more sophisticated understanding of the market demand, a perception of user experience and therefore promotes product design and quality improvement. Although the regression analyses show that the communication between software firms and universities cannot promote innovation, however, the interviews reveal that the effects of University on firms’ innovation are varied from firms to firms. The university spin-off companies and enterprises founded by alumni, have maintained close ties with university, which has a significant impact on enterprise innovation. But many other companies failed to establish a smooth relationship with universities. They can hardly reach a consensus on the market demand and product design with universities. That’s why the study denies the influence of universities. The results of this thesis not only criticizes the new regionalism which treats clustering enterprises as homogeneous actors, but also challenged the "open" innovation theory that lays equivalent emphasis on all types of external linkages without distinguishing the significant and valuable ones form others. As it stands, the thesis highlights the importance of firm heterogeneity on the relationship between clusters, networks and innovation. It also provides a theoretical reference on the development of software industry for the local government.