Technological innovation in China's high-tech sector: Insights from a 2008 survey of the integrated circuit design industry in shanghai

An intensive investigation of China's high-tech sector led by a noted Hong Kong- based geographer examines the patterns of cooperation between firms and local governments (so-called 'state-firm strategic resonance') as an alternative to knowledge spillover in an effort to explain why certain firms are more likely to innovate than others within an economic cluster. As a case study, they select the integrated circuit design industry (a key in the development of more efficient computing and thus a critical element of the digital revolution) in Shanghai, one of the most advanced metropolitan regions in China. A systematic analysis of firm-level data obtained inter alia from the authors' 2008 survey and interviews revealed a significant pattern of variation in innovation that could not be explained by inter-firm interactions in the process of industrial clustering. The authors argue that the uneven pattern of technological innovation is contingent on a state-built institutional and market environment designed to stimulate firms' innovative activities, and demonstrate how firms respond to that environment in a Chinese metropolis. Journal of Economic Literature, Classification Numbers: H700, L630, O310, P230, R280. 5 figures, 7 tables, 57 references.