Internal And External Increasing Returns, Dynamic Portfolio And Cluster Development: Empirical Study Of The Automobile And Component Industry Cluster In Taizhou, Zhejiang, P. R. China

This research is focused on the mechanism of cluster formation and development, especially how inner firms innovate continually and how the production and technology structure of clusters upgraded continually.In field researches, the author noticed some unmatched phenomenones with widely accepted theoris of cluster. For example, weak relationships among firms are presented in newly formed clusters,and factors of regional level have limited influences on firms, especially on leading firms. On the contrary, the emergences of clusters are somehow serendipitous, i.e. clusters are always related with the choices made by individual firms. Innovations conducted and organizing methods adopted by leaders often have important influences on clusters. None of these can be fully explained by traditional external frameworks of clusters, because these theories do not care much of the inchoate periods of clusters, but also not care the interactions between inner firms and clusters. Thus to know exactelly the economy growth process, one must figure out the whole evolutionary processes of specific cluster and firms. This research is carried out based on these understandings.We carried out an empirical research on three automobile, motorcycle and components sub-clusters of Taizhou, Zhejiang, and developed a new endogenesis and dynamic framework. The point is, internal increasing return on organization level and external increasing return on regional level are the bases of cluster development. Internal increasing returns are presented in the process of new firm creation and firms' innovation. This effect is multipled by competition and simulation and thus is presented in cluster level. At the same time, labor divisions and corporations among firms reinforce the cluster's dynamic portfolio, which is endogenously developed and represents cluster's capability to stimulate innovations. This external increasing return mechanism, together with other external increasing returns, such as those due to labor division and knowledge diffusion, contributes to the economy growth of clusters. In a word, cluster development is the result of inequilibrious innovations and the discretionary choices.The bases of our new framework are the most recently development of increasing return theory, innovation theory, corporation theory and dynamic capapbility theory. The new framework is helpful to answer if and how developing regions can set up on the way of growth. Thus it is helpful to make relevant regional policies by governments. At the end of the thesis, we will discuss some of these.