Catch‐up via agglomeration: A study of township clusters

Abstract

Research Summary This study examines both the horizontal and the vertical dimensions of Chinese township industrial clusters in order to disentangle the determinants of catch‐up performance. By examining 87 township clusters in Jiangsu Province, we find that a cluster's competitive intensity partially mediates the relationship between cluster size and cluster performance and that the number of R&D centers and interfirm joint actions in a cluster positively affects a cluster's innovativeness which, in turn, contributes to cluster performance. Our study not only helps shed light on what strategic factors led Chinese manufacturing clusters to catch up in the global value chain, but our findings can be used as a basis for comparison with other types of clusters around the world. Managerial summary Despite the emergence of Chinese manufacturing industries over the past 30 years, little is known about how local clusters have helped Chinese firms catch up in global competition. By analyzing the performance of 87 township industrial clusters in Jiangsu Province, we find that the level of competition in a cluster mediates the relationship between cluster size and cluster performance and that a cluster's number of R&D centers and interfirm collaborations positively affect a cluster's innovativeness which, in turn, contributes to cluster performance. Our study contributes to a better understanding of cluster catch‐up strategies, helping compare and contrast the differences between clusters from developing countries and ones from developed countries. Copyright © 2016 Strategic Management Society.

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