Local and ultra-local business network, absorptive capability, and clustered firms’ upgrading

Dai Weiqi; Lin Qiao; Wei Jiang

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Science Research Management ›› 2013 ›› Issue (4) : 79-89.

Local and ultra-local business network, absorptive capability, and clustered firms’ upgrading

Dai Weiqi¹, Lin Qiao², Wei Jiang³

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Abstract

Drawing upon perspectives from research fields, such as innovation, economic geography, global value chain, etc, the relationship between local and ultra-local business networks and upgrading of clustered firms is theoretically constructed, two competing hypotheses are proposed. Invoking dynamical capability theory, the mediative role of absorptive capability between business network and the upgrading of clustered firms is explored. Using a sample of 171 clustered firms from Zhejiang Province, the empirical study indicates that ultra-local network plays a relatively important role in shaping the upgrading of clustered firms, and absorptive capability completely mediates the relationship between ultra-local business network and upgrading. By providing first-hand empirical evidence, the contribution involving the debates on the relative importance of local and ultra-local network to upgrading is made. In addition, the internal mechanism which business network promotes the upgrading of clustered firms is explored, revealing the logic behind the phenomenon.

Key words

local business network / ultra-local business network / cluster upgrading / absorptive capability / clustered firm

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Dai Weiqi, Lin Qiao, Wei Jiang. Local and ultra-local business network, absorptive capability, and clustered firms’ upgrading[J]. Science Research Management. 2013(4): 79-89

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