“Upgradation” or “Degradation” of Industrial Agglomeration Environment: A New Interpretation of “Innovation Inertia”

Hu Bin; Wan Daoxia

doi:doi:10.16538/j.cnki.jfe.2019.05.002

Summary

In addition to being influenced by its own characteristics, policy preferences and external factors, industrial development cannot ignore the dynamic evolution of industrial agglomeration environment and its effects. When discussing the problems of industrial agglomeration and development zones, most existing literature does not consider the remolding effect of enterprise dynamic factors on the evolution of industrial agglomeration environment under open conditions, which is an obvious deficiency in the research on industrial agglomeration in the period of " post-policy rent”. This paper argues that when industrial agglomeration (in China, mainly represented by the government-developed development zone) becomes the ubiquitous environment for the survival, development and innovation of enterprises, the lack of enterprise innovation caused by the environmental upgrading dilemma is a more alarming practical problem than the lack of enterprise innovation ability.　　This paper attempts to clarify the microcosmic influence and function mechanism of different types of industry agglomeration environment on enterprise innovation preferences, and believes that the layering of corporate innovation preferences is caused by industrial agglomeration environment due to its external differences causing, and the firm entry dynamics for acquiring knowledge and promoting innovation will enhance the differential impact on industrial agglomeration environment through the " screening mechanism” so as to promote the evolution of industrial agglomeration environment. If the homogeneity of firm entry dynamics is high, those highly specialized areas are likely to fall into a state of " selective locking”. Under the action of the market mechanism, the continuous superposition of this state will further lead to the self-closing and recession of the whole industrial agglomeration environment, while enterprises in the agglomeration area will experience the loss of collective innovation vitality. On this occasion, in addition to the existing literature (Hu Bin and Wan Daoxia, 2017), this paper proposes another kind of enterprise " innovation inertia” caused by the " degradation” of industrial agglomeration environment, which is mainly affected by market selection.　　Empirical results show that the specialized agglomeration environment significantly enhances the company’s low-end innovation preference, while the related diversified agglomeration environment significantly enhances the company’s high-end innovation preference. Moreover, the stratified impact of agglomeration environment on corporate innovation preferences is significantly enhanced by the presence of firm entry dynamics. In this process, the evolution of different types of agglomeration environment along the direction of " upgradation”or " degradation” can not only provide analysis ideas for the transformation of the development zone after the " policy rent” diluted in the real economy, but also provide a new explanation for the " innovation inertia” of enterprises from the perspective of the obstacles to the upgrading of agglomeration environment and the locking of functions. Further analysis shows that product market regulation can reduce the positive impact of specialization on the low-end innovation preference of enterprises, while the supply of producer services such as financial services and legal services can enhance the positive impact of relevant diversification on the high-end innovation preference. Therefore, in the entry of enterprises for innovation purposes, the differentiated institutional supply should be enhanced according to the type of agglomeration.