Modular Industrial Organization, Technological Innovation And Industrial Upgrading

Modularity is a kind of mode of decomposing and composing complex product. Technological modularity results in industrial modularity, also leads to modularized industrial organization characterized by production deintegration and intra-product international division of labor. Comparative advantages of production factors of different countries match different stages of intra-product international division of labor, developing countries of course become OEMs of stages of labor-intensive production, who have been captured by GVC controlled by developed countries, thereby have been locked in low-end status of values chains during a long term. The reality brings along enormous obstacles to technological catch-up and industrial upgrade of developing countries. From China's perspective, how to make use of the opportunities of modularity to enhance independent technological innovation capacities, to rapidly impel industrial upgrade, to improve domestic technological content of export, consequently break through lock-in status of low-end of GVC, which is currently a significant subject of shifting economic development mode.It is theoretically and practically significant of the research on technological innovation and industrial upgrade from the perspective of modularized industrial organization. Firstly, how to identify the path of technological capacity enhancing and industrial upgrading under different product architecture? Secondly, how to enhance the capacity of modular innovation under the condition of division of knowledge, and to establish well-moving mechanism of modularized technological innovation? Thirdly, does technological spillover effect of modularized division of labor exist? If it does, which characteristics does this technological spillover effect have?Theoretical and empirical methods are synthetically employed in the research. Theoretical methods include system analysis, game theory and mathematical analysis; empirical methods include factor analysis, panel data regression and case study. The emphasis of empirical research is to test the technological spillover effect of Chinese manufacturing sector's participation in international division of labor of vertical specialization employing panel data regression. Specifically, the empirical tests aim at dynamic relationship between division of labor of vertical specialization and R&D input, division of labor of vertical specialization and R&D output, besides, export ratio of processing trade and patent patterns.There are two innovative points on the research. Firstly, it brings forward an adoptable path from modularized division of labor to industrial upgrade. Even though modularized division of labor is a prerequisite for the formation of captured value chains between developed and developing countries, whereas, China can still grasp the opportunities of modularized division of labor to elongate core competence of local enterprises upward to high value-added segment of value chains, the fundamental path to this goal is modularized technological innovation. Secondly, it takes an empirical research on technological spillover effect of vertical specialization. One of the basic characteristics of modularized industrial organization is international division of labor of vertical specialization, thus the empirical research on technological spillover effect of vertical specialization can be utilized to test whether China's participation in international division of labor of vertical specialization actually facilitate industrial technological innovation, that is to say, whether technological spillover effect of vertical specialization exist, if does, what about its specific performance, so as to consummate mechanism of industrial innovation and policies of scientific and technological management with the aim of intensifying technological spillover effect.There are six concluding points on the research. Firstly, the micro mechanism of technological innovation of modularized industrial organization is manifested as basis of knowledge and operations of modularity, the moderate is manifested as innovation of standards and modules of industry, the macro is manifested as country-level open innovation strategy under the circumstance of modularized production network. Secondly, China's regional technological innovation capacity is characterized by spatial agglomeration on distribution to some extent, with a prerequisite of location difference, polarization effect results in that the east becomes cluster zone of technological innovation. Thirdly, under the background of modularized industrial organization, Chinese manufacturing sector's participation in international division of labor of vertical specialization has promoted industrial technological innovation as a whole, vertical specialization significantly takes positive effect on R&D output represented by patent application number. Nevertheless, international division of labor of vertical specialization takes extrusion effect on R&D input of local OEMs of China to some extent. Fourthly, the rise of the degree of Chinese manufacturing sector's participation in international division of labor of vertical specialization has only promoted low-level peripheral innovation, has not promoted high-level innovation of core technology which has been hindered on the contrary. Fifthly, under the background of modularized industrial organization, China is confronted with dilemmas of industrial upgrade from two different perspectives. One is product architecture trap in the perspective of product architecture, namely lock-in status of low end of product value chains and bottleneck of system innovation. The other is lock-in status of low end in the perspective of global value network. Sixthly, path selection of industrial upgrade of China mainly rests in two aspects. One is following the law of comparative advantage evolution. The path of industrial upgrade of China should be nonlinear, intra-industry upgrade is the point of convergence of industrial upgrade. The other is obtaining advantage of product architecture. Chinese local enterprises should establish close partnership with advanced enterprises under the background of technological modularity, whilst elongate core competence upward to high-end segments of value chains; alternatively, should retain independence in cooperation under the background of technological integration, whilst defuse system innovation risk via division of labor and collaboration on the basis of value chains.