Comparison of Innovative Characteristics and Modes between

Comparison of Innovative Characteristics and Modes between
Traditional and High-tech Industrial Clusters
，
XU You-yuan SHENG Ya
College of Business Administration, Zhejiang Gongshang University, P.R.China, 310035
Abstract The academic field pays great attention to both traditional and high-tech industrial clusters.
However, the research on their innovative modes is not sufficient. Facing the current misconception of
“innovation doesn’t exist in traditional industrial clusters”, this paper firstly presents the innovative
modes of industrial clusters. Then, it compares traditional and high-tech industrial clusters, and their
innovative modes. Eventually, it summarizes the innovative modes that traditional and high-tech
industrial clusters have adopted.
Keywords Industrial clusters; Innovative characteristics; Innovative modes; Traditional industry;
High-tech industry
1
Introduction
As a widely existing economic phenomenon, industrial clusters have been paid considerable attention to
by the academic and practical field under the background of economic globalization and regionalization.
Industrial clusters are divided into traditional industrial clusters and high-tech industrial clusters in terms
of the technology that their dominant industries adopt. Traditional industrial clusters arose long ago and
the earliest study on it could be Marshell’s “external economy” theory. High-tech industrial clusters
develop with the emergence of modern high technology, in the form of high-tech industrial parks,
scientific and technological parks, etc. For each industrial cluster, innovation is the resource of its
competitive advantages. Both traditional industrial clusters and high-tech industrial clusters have their
own innovative modes.
High-tech industrial clusters are the geographic aggregation of high-tech companies and associated
institutions, linked by commonalities and complementarities. According to OECD’s statistics, high-tech
industries consist of the following six components: aircraft/aerospace, drug and medicines, office and
computing equipment, scientific instruments, communications equipment, electrical machinery.
However, dominated by traditional industries, traditional industrial clusters are economic clusters
formed by the aggregation of companies and institutions (WEI Jiang & SHEN Jun, 2003).
With different academic categories, innovative modes are currently divided into different modes, such as
self-development model, imitative innovation model and collaborative development model from the
perspective of innovative origin. Robertson & Gatignon (1998) also presented three technology
development governance modes: internal R&D development, alliances to mutually develop technology
and market contracting of an R&D project or licensing a technology. Five-generation innovation model
(technology push, demand pull, coupling model integrated procedural model, systems integration and
networking model) was put forward on the basis of innovation processes. Domestic scholars focused on
the whole enterprises and brought forward common innovative modes: the coordinated innovation
among technology, organizational and cultural cooperation enterprise (ZHANG Gang, CHEN Jin & XU
Qing-rui, 1997) , and “three-in-one” innovative model of concept, system, technology (WANG
Shao-hua & JIA Lei, 2003).
，
2
Presentation of innovative modes of industrial clusters
Industrial clusters are considered as complex innovative networks, and their innovative modes might
differ from the innovative modes applied by a single firm. Based on the above opinion, this paper
constructs novel innovative modes of industrial clusters: internal development, cooperative development,
imitative innovation, mode adoption. These four modes are based on technology development modes of
cluster firms and could enhance innovative capability of industrial clusters. We explain them as follows:
1) Internal development. Internal development means that the firm develops new products or new
technologies just depending on the firm’s internal resource, with the possession of patent.
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2)
3)
Generally speaking, the firm adopts this mode to satisfy new demands, attract new clients and
develop new markets. To keep the leading status and develop core capability, “the leading wild
goose” in industrial clusters will develop new technologies and products. After awareness of the
trend, other firms begin to develop their own technologies and products to prevent from lagging
behind. This “domino effect” dramatically strengthens the innovative capability of industrial
clusters.
Cooperative development. As tightly-related economic clusters, industrial clusters are the seedbeds
for cooperation among firms, firms and scientific institutions, firms and universities. Geographic
proximity, flowing information and mutual trust are three key factors for firms’ cooperation when
they want to attain their goals or get benefit from industry chain’s horizontal and vertical
communication. One important thing is to develop new products and new technologies during the
cooperation. In order to be the leading firm or catch up with the leading firm, some companies
work to share the final technical fruits with proving capitals, equipments, and technicians together.
Imitative innovation. Imitative innovation is an incremental innovative behavior based on full
absorption of other technologies. It is widely adopted because of the small investment but quick
effects. Although a single firm can not make considerable progress in technology while applying
imitative innovation, cluster firms can exchange experience and their own technologies to
strengthen the innovative capability in this situation, which result in “1 1 2”. The innovative
behavior is not only the behavior of a single firm, but the one of the industrial clusters.
Mode adoption. It does not mean that cluster firms participate in innovative activity consciously.
However, the firms’ behavior has indirectly strengthened the innovative capability of industrial
clusters in this special circumstance. It is also the presentation of “externality” of firms’ behavior.
We define the firms’ production behavior of simply introducing other firms’ technologies
equipments or getting production license as mode adoption. Although a single firm can not make
technological breakthrough, and even technological improvement, technology diffusion will come
out and other firms’ innovative motivation will be triggered in this situation.
＋＞
4)
3
Comparison of innovative modes of industrial clusters
We will compare innovative modes of industrial clusters in three core aspects: R&D expenditure,
technology cycle and business risk.
1) R&D expenditure. Internal development and Cooperative development will be at a high level of
R&D expenditure because they do research in a totally new field. For example, Intel (located at
Silicon Valley) spends billons of dollars in developing new chips each year. And the development of
new technology may cost cluster firms millions of dollars. Imitative innovation is a second
innovation with most investments spent on learning and improving behavior, so the R&D
expenditure is low. Because applying mode adoption means that the firm does not participate in the
developing process, the R&D expenditure is close to zero.
2) Technology cycle. Impacted by technological complexity and uncertainty, internal development and
cooperative development have a long technology cycle, varying from several months to years.
Imitative innovation reflects the rapid reaction to the market. One example is the clothes cluster
firms in Wenzhou, which can produce the fashionable clothing in a few days after probing into the
prevailing color and style of clothing in the global market. Mode adoption just takes advantage of
mature technology and equipment, so we call the technology cycle is close to zero.
3) Business risk. Internal development and cooperative development are doomed to be the high-risk
and high-return modes, which is part of the reasons that they exist. The culture of “accepting
failure” in Silicon Valley is an excellent explanation to the above viewpoint. With “standing on the
shoulder of giants”, the rate of failure of imitative innovation is much lower than that of internal
and cooperative development. Furthermore, for the reason of adopting mature technologies and
equipments, the risk of mode adoption is relatively low.
By summarizing the above viewpoints, we could get table 1.
：
Table 1 Comparison of Innovative Modes of Industrial Clusters
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Three core aspects
4
R&D expenditure
internal
development
high
cooperative
development
high
imitative
innovation
low
adoption
mode
close to zero
Technology cycle
long
long
short
close to zero
Business risk
high
high
low
low
Comparison of innovative characteristics of traditional and high-tech
industrial clusters
In this part, we compare traditional industrial clusters with high-tech industrial clusters to understand
them more deeply. The following five aspects are studied.
1) Forming conditions. Most traditional industrial clusters arise from the market mechanism, such as
the traditional industrial clusters in Zhejiang Province. However, the construction of high-tech
industrial clusters is usually influenced by government. One example is the high-tech industrial
parks supported and launched by the Chinese government. The success of Silicon Valley partly
benefits form the contribution of the government.
2) Innovative networks. The low investment in R&D and labor-intensive characteristics weaken the
innovative capability of cluster firms in traditional industrial clusters, so the innovative networks of
traditional industrial clusters are relatively simple in most cases. On the contrary, the innovative
networks of high-tech industrial clusters are complex because of high investment in R&D and
knowledge-intensive characteristics. Meanwhile, the flow of knowledge, technology and
information is beneficial for perfecting innovative networks.
3) National policies. For the national strategy of winning national competitive advantages, most
countries pay much attention to high-tech industries. The government carries out many polices,
such as tax policy, financial policy, to support the development of high-tech industrial clusters.
Actually, the government support traditional industrial clusters selectively. For instance, the Chinese
government only invests in some special traditional industrial clusters, while other traditional
industrial clusters have to develop by themselves.
4) Current stage. Darwin’s theory of evolution tells us that the plants and animals develop from a
simpler form to a more complex form. Industrial clusters are of some similar characteristics. Most
high-tech industrial clusters have evolved to a higher level in a short time, forming a relatively
complete system of industrial structure, factor condition, demand condition, and auxiliary
organization. Although traditional industrial clusters have experienced evolvement for a long time,
only a few competitive traditional clusters have formed integrated “diamond model”, while the rest
of them are in the middle or low level.
5) External environment. Both of these two industrial clusters are facing the global market and global
competition. But absorbing risk investment is an advantage for high-tech industrial clusters.
General speaking, the change of external environment has less influence on traditional industrial
clusters than high-tech industrial clusters. Both of them need to learn how to adapt to the changing
environment.
By summarizing the above viewpoints, we could get table 2.
Table 2: Comparison of Innovative Characteristics of Traditional Industrial Clusters and High-tech
Industrial Clusters
The five aspects
high-tech industrial clusters
traditional industrial clusters
Forming conditions
government support
market mechanism
Innovative networks
complex
most are simple
National policies
extensive support
selective support
Current stage
most are in a high level
most are in a middle, low level
External environment
absorbing risk investment
better adaptability
5
Conclusion
1
Most high-tech industrial clusters adopt two innovative modes: internal development and
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cooperative development. WANG Jun(2002) argues that the innovative capability of industrial
clusters comes from two aspects, endogeny and exogenesis. The forming condition of exogenous
innovative capability is the entry of technology leaders such as transnational corporations. But
endogenous innovative capability usually exists in high-tech industrial clusters such as Silicon
Valley. Most researches on Silicon Valley, Cambridge District and Bangalore from India have
proved this view. However, most high-tech industrial clusters in China adopt imitative innovation
for the reason of restriction by their technology development capability. For example, the software
products in Hangzhou High-tech Software Park have been improved on the basis of other products.
As the representative of Chinese high-tech industrial clusters, ZhongGuanCun Science Park also
follows other clusters’ steps in some fields.
2
Traditional industrial clusters adopt corresponding innovative modes after positioning themselves
in the proper industries. Clothes industrial clusters in Italy focus on brand and design, so they are
likely to choose internal development and cooperative development. Some well-known industrial
clusters, such as food industrial clusters in Holand and architecture industrial clusters in Denmark,
also adopt these two modes. The mode of leading firms adopting internal development and
cooperative development and guiding other SMB happens in traditional industrial clusters in
Zhejiang, such as the leading effect of Delixi and CHINT Group in low-voltage electrical
apparatus clusters in Liuzhou.
3
Traditional industrial clusters in Zhejiang and Guangdong also choose imitative innovation. In the
first stage, the cluster firms imitate other firms’ products. When they reach a relatively large scale,
some firms begin to design their own products and other firms in this cluster will imitate theirs.
This mode has strengthened the innovative capability to some extent but it also generates the
inertia of some firms. How to balance these two opposite effects or find a new solution has become
a worthwhile subject to study.
4
Another innovative mode for traditional industrial clusters is mode adoption. Clothes cluster firms
in Pinghu introduce advanced equipment and produce for NIKE, ARMANI and so on. Babei
Group Co., Ltd. in necktie industrial clusters in Shengzhou firstly introduced advanced equipment
from Germany and France after the middle of 1990s. The efficiency and quality of manufacture
had improved a lot. After viewing this effect, other firms started to introduce advanced equipment
and a few firms began to develop their own technology. This trend enhanced the innovative
capability of the cluster. In virtue of the specific network of cluster, some advanced techniques will
be spreading in the form of tactic knowledge.
We have concluded the innovative characteristics and modes. Some detailed differences between
high-tech industrial clusters and traditional industrial clusters will be studied in the future.
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References
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[4]WANG Shao-hua, JIA Lei. The Growing and Innovative Models of Aggregations In Zhejiang
Province, P. R. China, Science Research Management, 2003:129-133. (in Chinese)
[5]WANG Jun. Study on Innovative Process of Clusters of Enterprises, Management World,
2002:102-110. (in Chinese)
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