Network Effects, Cooperation and Entrepreneurial Innovation in China

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Abstract

The rapid rise of an innovative private manufacturing economy in China challenges standard economic explanations of growth, which typically assume the existence of well-defined formal institutions such as property rights and company laws safeguarding investor and creditor interests. We highlight the social structure of cooperation that enables innovative activity in private manufacturing firms when formal property rights protection remains weak. We show how network effects linked to inter-firm cooperation in industrial clusters allowed private entrepreneurs to quickly develop reliable business norms to reduce the inherent risk of malfeasance and contract breach in formal and informal collaborative efforts. Survey data from a sample of 700 manufacturing firms located in China’s Yangzi Delta region confirms that both formal and informal types of inter-firm collaboration are effective, though in different areas of innovative activity.

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Research areas and keywords

Subject classification (UKÄ) – MANDATORY

  • Economics and Business

Keywords

  • China, informal cooperation, formal R&D agreements, entrepreneurship, innovation, network effects
Original languageEnglish
Pages (from-to)283-302
JournalAsian Business & Management
Volume14
Issue number4
Publication statusPublished - 2015
Publication categoryResearch
Peer-reviewedYes

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