Embeddedness and local patterns of innovation: evidence from Chinese prefectural cities
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Embeddedness and local patterns of innovation: evidence from Chinese prefectural cities Giorgio Prodi1
· Francesco Nicolli1,2
· Federico Frattini1
© Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract The diffusion of innovative activities has been very fast in China since the mid1990s. The literature nonetheless suggests that internationally-relevant innovation may have delayed gaining embeddedness in some places, depending on the strategy it was “seeded”. This paper posits that different degrees of embeddedness are linked with different local patterns of innovation and investigates these linkages across Chinese prefectural cities. Four research hypotheses are stated, one for each indicator identified in the literature to investigate technological catching up. The empirical exercise is set as an ordered logistic regression of data rearranged from the OECD Patent Databases for the period 1981–2009. The results show that embeddedness is positively linked with innovation that increasingly relies on its own local past and negatively linked with innovative activities more concentrated across patent owners. The evidence of a nexus with originality and technology cycle time is less clear and requires appropriate investigation in future research. At the state of the art, the main hint is that embeddedness is gained where the knowledge paths increase in complexity. Keywords China · Embeddedness · Innovation · Patent · Technological catching up JEL Classification O33 · O53 · R19
Federico Frattini
[email protected] Giorgio Prodi [email protected] Francesco Nicolli [email protected] 1
University of Ferrara, 44121 Ferrara, Italy
2
European University Institute, 50133 Fiesole, Florence, Italy
G. Prodi et al.
1 Introduction Technological catching up is essential to the economic rise in middle-income countries (Lee 2013). Laggards are actually required to accumulate technologically less-vintaged capital to close the gap with the more industrialized economies representing the global technology frontier (Abramovitz 1986). On this frontier, up-to-date capital accumulation is mostly an endogenous process, while indigenous capital accumulation in emerging economies can critically benefit from being complemented by capabilities imported from abroad (Lall 1992). Despite a debate in the literature (De Marchi et al. 2018; Fagerberg et al. 2018; Lee et al. 2018), several channels are reckoned to favor a local absorption of foreign capital and technologies in middle-income countries, such as the import of goods, capital, brains and the involvement in global value chains (GVC). This very absorption is essential for indigenous-innovation patterns to grow less-and-less dependent upon exogenous sources and to“seed” local innovation systems (Chung and Lee 2015; Lee et al. 2018). The interaction between endogenous and exogenous capabilities may nonetheless produce side effects in the medium–long term, such as foreign activities displacing some of those indigenous (Fu and Gong 2011; Lin and Kwan
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