External Linkages, Innovation, and Regional Diversification

Abstract

The Evolutionary Economic Geography literature has extensively investigated the impact of local capabilities on innovation and regional diversification. However, the role of external linkages has only received limited attention. The general concern of this thesis is how external linkages impact innovation and regional diversification with an evolutionary approach. This is further elaborated in four research questions. First, what is the impact of returnees on firm innovation? Second, what is the impact of MNEs on regional industrial diversification? Third, through what knowledge spillover channels can MNEs impact local export performance? Last, what is the impact of co-inventor networks on regional technological diversification? The findings of this thesis show that external linkages do matter for innovation and regional diversification both in the context of China and Europe. And external linkages could interact with relatedness and complexity in regional diversification, thus triggering different diversification paths. In more detail, the main content of each chapter could be summarized as follows. Chapter 1 presents the motivation, theoretical background, research questions, and outline of the thesis. Chapter 2 investigates the relationship between the global mobility of Chinese returnees and firm innovation for Chinese public listed firms. We construct a new dataset from CNRDS, PatentsView, CSMAR, and LinkedIn data. Our findings show that, in general, both returnee employees and managers have positive and significant impacts on firm innovation. The roles of returnee employees and returnee managers are complementary, that is, returnee employees as the agents of domestic patenting, and returnee managers as the ones for international patenting. We also find that the heterogeneities of returnees matter for firm innovation. Chapter 3 studies the relationship between foreign MNEs and industry entry in Chinese regions by linking the MNE research with regional diversification literature. The association between industry entry and the presence of MNEs in the same industry and related industries is tested for 331 Chinese prefectures between 1998 and 2007. Our findings indicate that the presence of MNEs in the same industry and related industries is positively and significantly associated with a higher probability of industry entry, and this association also holds for the entry of unrelated and complex industries. The effect of MNEs is larger for knowledge-intensive industries. Chapter 4 focuses on the role of relatedness and forward-backward linkages in the process of MNEs knowledge spillovers to domestic firms in the context of industrial export quantity and quality in Chinese regions. The effect of relatedness and forward-backward linkages is tested for 279 Chinese prefectures between 2000 and 2007. The results in Chapter 4 show that relatedness linkages matter in the context of export quantity and new exporting destination entry, whereas forward-backward linkages matter for the complexity of export products. Chapter 5 explores the role of both internal and external co-inventor networks in regional technological diversification, considering the effect of both relatedness and knowledge complexity with the OECD REGPAT dataset. Our results show that both internal co-inventor network connectivity and external co-inventor network linkages could facilitate regional technology entry and inhibit technology exit. However, too inwardly oriented, or outwardly connected co-inventor networks would hamper patent production. We also find suggestive evidence that both internal co-inventor network connectivity and external co-inventor network linkages could induce related and complex regional technological diversification. Chapter 6 concludes and discusses policy implications. It also discusses the limitations of this thesis and proposes directions for future research.