Skip to main content
SpringerLink
Log in
SpringerLink
Log in

Absorptive Capacity, Proximity and Innovation: Linking up the Intra-Firm Characteristic with Inter-Firm Linkages

  • Chapter
  • First Online:
Towards a Dynamic Regional Innovation System

  • 720 Accesses

Abstract

Proximity concept provides a measurement of accessibility other than the concept of externality as just being there. To determine the impact of proximity on learning and innovation has become a key issue in economic geography. In the context of transition economy, this chapter focuses on the role of organizational proximity and social proximity in fostering complex product innovation activities with further consideration on sufficient absorptive capacity. Based on a set of questionnaires conducted in the PRD, China, this chapter investigates the capacity and strategy of local electronics firms to capitalize on proximity. The result shows that electronics firm, especially small and medium sized firms are more interested and capable to interact with domestic customers and external institutes to obtain tacit knowledge and trigger innovative ideas. Moreover, production experience in high-tech fields is an important component of absorptive capacity that enables the use of proximity, while the educated level of managerial staff and entrepreneurs that are able to negotiate and strategically couple with global firms is crucial in using organizational proximity to foster innovation. Finally, this chapter shows that a group of social active firms has emerged, which is essential for the formation of a dynamic regional innovation system. However, the effect of social proximity in fostering innovation is marginal. Finally, the chapter pointed out that governance infrastructure should be established to stabilize and support the interactive learning, especially that within the social proximity.

Part of the chapter has been reorganized and published as Strategies of using Social Proximity and Organizational Proximity in Product Innovation: Empirical Insight from the Pearl River Delta, China. Fu W, Schiller D, Revilla Diez J. Zeitschrift fuer Wirtschaftsgeographie 56/1–2, Copyright © 2012, Buchenverlag.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 39.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 54.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 54.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

References

  • Aghion P, Howitt P (1998) Endogenous growth theory. MIT Press, Cambridge

    Google Scholar 

  • Allen TJ (1977) Managing the flow of technology. MIT Press, Cambridge

    Google Scholar 

  • Armour HO, Teece DJ (1980) Vertical integration and technological innovation. Rev Econ Stat 62(3):470–474

    Article  Google Scholar 

  • Arora A, Gambardella A (1990) Complementarity and external linkages: the strategies of the large firms in biotechnology. J Ind Econ 38(4):361–379

    Article  Google Scholar 

  • Arrow KJ (1969) Classificatory notes on the production and transmission of technological knowledge. Am Econ Rev 59(2):29–35

    Google Scholar 

  • Asheim BT, Isaksen A (2002) Regional innovation systems: the integration of local ‘sticky’ and global ‘ubiquitous’ knowledge. J Technol Transf 27(1):77–86

    Article  Google Scholar 

  • Asheim B, Coenen L, Vang J (2007) Face-to-face, buzz, and knowledge bases: sociospatial implications for learning, innovation, and innovation policy. Environ Plan C Gov Policy 25(5):655–670

    Article  Google Scholar 

  • Barney JB (1991) Firm resources and sustained competitive advantage. J Manage 17(1):99–120

    Google Scholar 

  • Barney JB (2001) Resource-based theories of competitive advantage: A ten-year retrospective on the resource-based view. J Manage 27(6):643–650

    Google Scholar 

  • Bathelt H, Malmberg A, Maskell P (2004) Clusters and knowledge: local buzz, global pipelines and the process of knowledge creation. Progress Human Geogr 28(1):31–56

    Article  Google Scholar 

  • Becker G (1964) Human capital. The University of Chicago Press, Chicago

    Google Scholar 

  • Bellandi M, Tommaso MR (2005) The case of specialized towns in Guangdong, China. Eur Plan Stud 13(5):707–729

    Article  Google Scholar 

  • Benhabib J, Spiegel MM (1994) The role of human capital in economic development evidence from aggregate cross-country data. J Monet Econ 34(2):143–173

    Article  Google Scholar 

  • Bianchi G (1998) Requiem for the Third Italy? Rise and fall of a too successful concept. Entrep Reg Dev 10(2):93–116

    Article  Google Scholar 

  • Boschma R (2004) Competitiveness of regions from an evolutionary perspective. Reg Stud 38(9):1001–1014

    Article  Google Scholar 

  • Boschma R (2005) Proximity and innovation: a critical assessment. Reg Stud 39(1):61–74

    Article  Google Scholar 

  • Brossard O, Vicente J (2007) Cognitive and relational distance in alliance networks: Evidence on the knowledge value chain in the European ICT sector. Paper presented at the summer DRUID Conference, CBS, Copenhagen, 18–20 June 2007

    Google Scholar 

  • Bunnell TG, Coe NM (2001) Spaces and scales of innovation. Progress Hum Geogr 25(4):569–589

    Article  Google Scholar 

  • Cameron G (1996) Catchup and Leapfrog between the USA and Japan. Dissertation, University of Oxford

    Google Scholar 

  • Capello R (1999) Spatial transfer of knowledge in high technology milieux: Learning versus collective learning processes. Reg Stud 33(4):353–365

    Article  Google Scholar 

  • Carrincazeaux C, Lung Y, Vicente J (2008) The scientific trajectory of the French School of Proximity: interaction- and institution-based approaches to regional innovation systems. Eur Plan Stud 16(5):618–629

    Google Scholar 

  • Carter AP (1989) Know-how trading as economic exchange. Res Policy 18(3):155–163

    Article  Google Scholar 

  • CASTED (Chinese Academy of Science and Technology for Development) (1999–2009, annual) Quanguo Keji Jingfei Touru Tongji Gongbao (Statistical Bulletin of China Technology Expenses). http://www.sts.org.cn/tjbg/tjgb/tindex.asp. Accessed 16 Sept 2014

  • Clark GL, Feldman MP, Gertler MS (eds) (2003) The Oxford handbook of economic geography. Oxford University Press, Oxford

    Google Scholar 

  • Coase RH (1937) The nature of the firm. Economica 4(16):386–405

    Article  Google Scholar 

  • Coe DT, Helpman E (1995) International R & D spillovers. Eur Econ Rev 39(5):859–887

    Article  Google Scholar 

  • Coe NM, Hess M, Yeung HWC et al (2004) Globalizing regional development: a global production networks perspective. Trans Inst Br Geogr 29(4):468–484

    Article  Google Scholar 

  • Cohen WM, Levinthal DA (1990) Absorptive capacity: a new perspective on learning and innovation. Adm Sci Q 35(1):128–152

    Article  Google Scholar 

  • Cohen WM, Levinthal DA (1994) Fortune favors the prepared firm. Manage Sci 40(2):227–251

    Article  Google Scholar 

  • Cooke P, Gomez Uranga M, Etxebarria G (1997) Regional innovation systems: institutional and organisational dimensions. Res Policy 26(4–5):475–491

    Article  Google Scholar 

  • CSSB (China State Statistical Bureau) (2009) Zhongguo Tongji Nianjian (China Statistical Yearbook). China Statistics Press, Beijing

    Google Scholar 

  • Delmar F, Davidsson P, Gartner W (2003) Arriving at the high growth firm. J Bus Ventur 18(2):189–216

    Article  Google Scholar 

  • Doloreux D, Parto S (2005) Regional innovation systems: current discourse and challenges for future research. Technol Soc 27(2):133–153

    Article  Google Scholar 

  • Eaton J, Gutierrez E, Kortum S (1998) European technology policy. Econ Policy 13(27):403–438

    Article  Google Scholar 

  • Ernst D (2002) The new mobility of knowledge: digital information systems and global flagship networks. In: Latham R, Sassen S (eds) Cooperation and conflict in a connected world. Routledge, London

    Google Scholar 

  • Ernst D, Kim L (2002) Global production networks, knowledge diffusion, and local capability formation. Res Policy 31:1417–1429

    Article  Google Scholar 

  • Evenson RE, Westphal LE (1995) Technological change and technology strategy. Handb Dev Econ 3(1):2209–2299

    Article  Google Scholar 

  • Feinberg SE, Gupta AK (2004) Knowledge spillovers and the assignment of R & D responsibilities to foreign subsidiaries. Strat Manage J 25(8–9):823–845

    Article  Google Scholar 

  • Forbes N, Wield D (2002) From followers to leaders: managing technology and innovation in newly industrializing countries. Routledge, New York

    Google Scholar 

  • Freeman C (2002) Continental, national and sub-national innovation systems—complementarity and economic growth. Res Policy 31(2):191–211

    Article  Google Scholar 

  • Fromhold-Eisebith M (2007) Bridging scales in innovation policies: how to link regional, national and international innovation systems. Eur Plan Stud 15(2):217–233

    Article  Google Scholar 

  • Gambardella A (1992) Competitive advantages from in-house scientific research: the US pharmaceutical industry in the 1980s. Res Policy 21(5):391–407

    Article  Google Scholar 

  • Gereffi G, Humphrey J, Sturgeon T (2005) The governance of global value chains. Rev Int Polit Econ 12(1):78–104

    Article  Google Scholar 

  • Glasmeier A (1991) Technological discontinuities and flexible production networks: the case of Switzerland and the world watch industry. Res Policy 20(5):469–485

    Article  Google Scholar 

  • Goedhuys M (2007) Learning, product innovation and firm heterogeneity in developing countries: evidence from Tanzania. Ind and Corp Chang 16(2):269–292

    Article  Google Scholar 

  • GPBS (Guangdong Provincial Bureau of Statistics) (2009) Guangdong Tongji Nianjian (Guangdong Statistical Yearbook). China Statistics Press, Beijing

    Google Scholar 

  • Granovetter M (1985) Economic action and social structure: the problem of embeddedness. Am J Sociol 91(3):481–510

    Article  Google Scholar 

  • Griffith R, Redding S, Van Reenen J (2003) R & D and absorptive capacity: theory and empirical evidence. Scand J Econ 105(1):99–118

    Article  Google Scholar 

  • Griffith R, Redding S, Van Reenen J (2004) Mapping the two faces of R & D: productivity growth in a panel of OECD industries. Rev Econ Stat 86(4):883–895

    Article  Google Scholar 

  • Grossman GM, Helpman E (1990) Trade, innovation, and growth. Am Econ Rev 80(2):86–91

    Google Scholar 

  • Grossman GM, Helpman E (2002) Integration versus outsourcing in industry equilibrium. Q J Econ 117(1):85–120

    Article  Google Scholar 

  • Hadjimichalis C (2006) The end of third Italy as we knew it? Antipode 38(1):82–106

    Article  Google Scholar 

  • Harrigan J (1999) Estimation of cross-country differences in industry production functions. J Int Econ 47(2):267–293

    Article  Google Scholar 

  • Hennart JF (1993) Explaining the swollen middle: why most transactions are a mix of market and hierarchy. Organ Sci 4(4):529–547

    Article  Google Scholar 

  • Howells JRL (2002) Tacit knowledge, innovation and economic geography. Urban Stud 39(5–6):871–884

    Article  Google Scholar 

  • Howitt P (2000) Endogenous growth and cross-country income differences. Am Econ Rev 90(4):829–846

    Article  Google Scholar 

  • Humphrey J (2004) Local upgrading in global chains: recent findings. Paper presented at the DRUID Summer Conference, Elsinore, 14–16 June 2004

    Google Scholar 

  • Humphrey J, Schmitz H (2002) How does insertion in global value chains affect upgrading in industrial clusters? Reg Stud 36(9):1017–1027

    Article  Google Scholar 

  • Iammarino S, McCann P (2006) The structure and evolution of industrial clusters: transactions, technology and knowledge spillovers. Res Policy 35(7):1018–1036

    Article  Google Scholar 

  • Ivarsson I, Alvstam CG (2005) The effect of spatial proximity on technology transfer from TNCs to local suppliers in developing countries: the case of AB Volvo in Asia and Latin America. Econ Geogr 81(1):83–111

    Article  Google Scholar 

  • Jaffe AB (1986) Technological opportunity and spillovers of R & D: evidence from firms’ patents, profits, and market value. Am Econ Rev 76(5):984–1001

    Google Scholar 

  • Keller W (1996) Absorptive capacity: on the creation and acquisition of technology in development. J Dev Econ 49(1):199–227

    Article  Google Scholar 

  • Kindleberger C (1964) Economic growth in France and Britain, 1851–1950. Harvard University Press, Cambridge

    Book  Google Scholar 

  • Kirat T, Lung Y (1999) Innovation and proximity—territories as loci of collective learning processes. Eur Urban Reg Stud 6(1):27–38

    Article  Google Scholar 

  • Lall S (1992) Technological capabilities and industrialization. World Dev 20(2):165–186

    Article  Google Scholar 

  • Laursen K, Foss NJ (2003) New human resource management practices, complementarities and the impact on innovation outcome. Camb J Econ 27: 243–263

    Google Scholar 

  • Lazaarini SG, Chaddad FR, Cook ML (2001) Integrating supply chain and network analyses: the study of netchains. J Chain Netw 1(1):7–22

    Article  Google Scholar 

  • Leibenstein H (1968) Entrepreneurship and development. Am Econ Rev 58(2):72–83

    Google Scholar 

  • Long JS (1997) Regression models for categorical and limited dependent variables. Sage, Thousand Oaks

    Google Scholar 

  • Lovett S, Simmons LC, Kali R (1999) Guanxi versus the market: ethics and efficiency. J Int Bus Stud 30(2):231–247

    Article  Google Scholar 

  • Lucas RE Jr (1990) Supply-side economics: an analytical review. Oxf Econ Pap 42(2):293–316

    Google Scholar 

  • Lundvall BA (2005) Interactive learning, social capital and economic performance. Paper presented at the international conference on advancing knowledge and the knowledge economy, national academies, Washington, DC, 10–11 January 2005

    Google Scholar 

  • Lundvall BA, Johnson B (1994) The learning economy. Ind Innov 1(2):23–42

    Google Scholar 

  • Luo Y (1997) Guanxi and performance of foreign-invested enterprises in China: an empirical inquiry. Manage Int Rev 37(1):51–70

    Google Scholar 

  • Luthje B (2004) Global Production networks and industrial upgrading in China: The case in electronics contract manufacturing. Paper presented at the international conference on Multinationals in China—Competition and Cooperation, Sun Yat-sen University, Guangzhou, China, 9–11 July 2004

    Google Scholar 

  • Malmberg A (1997) Industrial geography: location and learning. Progress Hum Geogr 21(44):573–582

    Article  Google Scholar 

  • Malmberg A, Maskell P (2006) Localized learning revisited. Growth Chang 37(1):1–18

    Article  Google Scholar 

  • Maskell P (1998) Low-tech competitive advantages and the role of proximity. Euro Urban Reg Stud 5(2):99–118

    Article  Google Scholar 

  • Massard N, Mehier C (2009) Proximity and innovation through an ‘Accessibility to Knowledge’ lens. Reg Stud 43(1):77–88

    Article  Google Scholar 

  • Menzel MP (2006) Dynamic Proximities. Towards a concept of changing relations. Papers presented at the 5th Proximity Congress, Bordeaux, 28–30 June 2006

    Google Scholar 

  • Meyer S, Schiller D, Revilla Diez J (2009) The Janus-Faced economy: Hong Kong firms as intermediaries between global customers and local producers in the electronics industry. Tijdschr Voor Econ En Soc Geogr 100(2):224–235

    Article  Google Scholar 

  • Michaely M, Papageorgiou D, Choksi A (eds) (1991) Liberalizing foreign trade: lessons of experience in the developing world. Blackwell, Cambridge

    Google Scholar 

  • Michie J, Sheehan M (1999) HRM practices, R & D expenditure and innovative investment: evidence from the UK’s 1990 workplace industrial relations survey (WIRS). Ind Corp Chang 8(2):211–234

    Article  Google Scholar 

  • Morrison A, Pietrobelli C, Rabellott R (2008) Global value chains and technological capabilities: a framework to study learning and innovation in developing countries. Oxf Dev Stud 36(1):39–58

    Article  Google Scholar 

  • Nelson RR, Winter SG (1982) An evolutionary theory of economic change. Harvard University Press, Bonston

    Google Scholar 

  • Nelson RR, Denison E, Sato K et al (1966) Investment in humans, technological diffusion, and economic growth. Am Econ Rev 56(2):69–82

    Google Scholar 

  • Nieto M, Quevedo P (2005) Absorptive capacity, technological opportunity, knowledge spillovers, and innovative effort. Technovation 25(10):1141–1157

    Article  Google Scholar 

  • North DC (1990) A transaction cost theory of politics. J Theor Polit 2(4):355–367

    Article  Google Scholar 

  • Organization for Economic Co-operation and Development (OECD) (1998) Main science and technology indicators. OECD, Paris

    Google Scholar 

  • Organization for Economic Co-operation and Development (OECD) (2005) Oslo manual: Guidelines for collecting and interpreting innovation data, 3rd edn. OCED, Paris

    Google Scholar 

  • Pan YG, Chi PSK (1999) Financial performance and survival of multinational corporations in China. Strat Manage J 20(4):359–374

    Article  Google Scholar 

  • Park SH, Luo YD (2001) Guanxi and organizational dynamics: organizational networking in Chinese firms. Strat Manag J 22(5):455–477

    Article  Google Scholar 

  • Peng MW, Wang DYL, Jiang Y (2008) An institution-based view of international business strategy: a focus on emerging economies. J Int Bus Stud 39(5):920–936

    Article  Google Scholar 

  • Porter ME (2000) Location, clusters, and company strategy. Oxford University Press, Oxford

    Google Scholar 

  • Piore MJ, Sable FC (1984) The second industrial divide: possibilities for prosperity. Basic books, New York

    Google Scholar 

  • Ramasamy B, Goh KW, Yeung MCH (2006) Is Guanxi (relationship) a bridge to knowledge transfer? J Bus Res 59(1):130–139

    Article  Google Scholar 

  • Romer PM (1986) Increasing returns and long-run growth. J Polit Econ 94(5):1002–1037

    Article  Google Scholar 

  • Romijn H, Albaladejo M (2002) Determinants of innovation capability in small electronics and software firms in southeast England. Res Policy 31(7):1053–1067

    Article  Google Scholar 

  • Rosenberg N (1982) Inside the black box: technology and economics. Cambridge University Press, Cambridge

    Google Scholar 

  • Saxenian A, Hsu JY (2001) The Silicon Valley–Hsinchu connection: technical communities and industrial upgrading. Ind Corpo Chang 10(4):893–920

    Article  Google Scholar 

  • Scherer FM (1998) The size distribution of profits from innovation. Econ Econom Innov 49/50: 495–516

    Google Scholar 

  • Schmitz H (1995) Small shoemakers and fordist giants: Tale of a supercluster. World Devel 23(1):9–28

    Article  Google Scholar 

  • Schmitz H, Nadvi K (1999) Clustering and industrialization: introduction. World Dev 27(9):1503–1514

    Article  Google Scholar 

  • Schumpeter JA (1942) Capitalism, socialism and democracy. Harper & Row, New York

    Google Scholar 

  • Shein EH (2004) Organisational culture and leadership. Jossey-Bass, San Francisco

    Google Scholar 

  • Smith JK, Schnucker C (1994) An empirical examination of organizational structure: the economics of the factoring decision. J Corp Financ 1(1):119–138

    Article  Google Scholar 

  • Standifird SS, Marshall RS (2000) The transaction cost advantage of guanxi-based business practices. J World Bus 35(1):21–42

    Article  Google Scholar 

  • Storper M (1995) The resurgence of regional economies, ten years later: the region as a nexus of untraded interdependencies. Eur Urban Reg Stud 2(3):191–221

    Article  Google Scholar 

  • Storper M, Venables AJ (2004) Buzz: face-to-face contact and the urban economy. J Econ Geogr 4(4):351–370

    Article  Google Scholar 

  • Su CT, Littlefield JE (2001) Entering guanxi: a business ethical dilemma in Mainland China? J Bus Ethics 33(3):199–210

    Article  Google Scholar 

  • Teece DJ (1986) Transactions cost economics and the multinational-enterprise—an assessment. J Econ Behav Organ 7(1):21–45

    Article  Google Scholar 

  • Torre A, Gilly JP (2000) On the analytical dimension of proximity dynamics. Reg Stud 34(2):169–180

    Article  Google Scholar 

  • Torre A, Rallett A (2005) Proximity and localization. Reg Stud 39(1):47–59

    Article  Google Scholar 

  • Tripsas M (1997) Unraveling the process of creative destruction: complementary assets and incumbent survival in the typesetter industry. Strat Manage J 18(summer special issue):119–142

    Google Scholar 

  • Tsang MC, Rumberger RW, Levin HM (1991) The impact of surplus schooling on worker productivity. Ind Relat A J Econ Soc 30(2):209–228

    Google Scholar 

  • Vicente J, Suire R (2007) Informational cascades versus network externalities in locational choice: evidence of ‘ICT clusters’ formation and stability. Reg Stud 41(2):173–184

    Article  Google Scholar 

  • Vinding AL (2006) Absorptive capacity and innovative performance: a human capital approach. Econ Innov New Technol 15(4&5):507–517

    Article  Google Scholar 

  • Wang JY, Blomstrom M (1992) Foreign investment and technology transfer: a simple model. Eur Econ Rev 36(1):137–155

    Article  Google Scholar 

  • Williamson OE (1975) Markets and hierarchies: analysis and antitrust implications: a study in the economics of internal organization. Free Press, New York

    Google Scholar 

  • Whitford J, Potter C (2007) Regional economies, open networks and the spatial fragmentation of production. Socio-Econ Rev 5(3):497–526

    Article  Google Scholar 

  • Yang C (2009) Strategic coupling of regional development in global production networks: redistribution of Taiwanese personal computer investment from the Pearl River Delta to the Yangtze River Delta, China. Reg Stud 43(3):385–407

    Article  Google Scholar 

  • Yeung HWC (2009) Regional development and the competitive dynamics of global production networks: an East Asian perspective. Reg Stud 43(3):325–351

    Article  Google Scholar 

  • Zahra SA, George G (2002) Absorptive capacity: a review, reconceptualization, and extension. Acad Manage Rev 27(2):185–203

    Google Scholar 

  • Zhang Y, Zhang ZG (2006) Guanxi and organizational dynamics in China: a link between individual and organizational levels. J Bus Ethics 67(4):375–392

    Article  Google Scholar 

  • Zhou X, Li Q, Zhao W et al (2003) Embeddedness and contractual relationships in China’s transition economy. Am Sociol Rev 68(1):75–102

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. School of Geographical Science, South China Normal University, Guangzhou, Guangdong, China

    Wenying Fu

Authors
  1. Wenying Fu
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Wenying Fu .

Rights and permissions

Reprints and permissions

Copyright information

© 2015 Springer-Verlag Berlin Heidelberg

About this chapter

Cite this chapter

Fu, W. (2015). Absorptive Capacity, Proximity and Innovation: Linking up the Intra-Firm Characteristic with Inter-Firm Linkages. In: Towards a Dynamic Regional Innovation System. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-45416-9_4

Download citation

  • DOI: https://doi.org/10.1007/978-3-662-45416-9_4

  • Published:

  • Publisher Name: Springer, Berlin, Heidelberg

  • Print ISBN: 978-3-662-45415-2

  • Online ISBN: 978-3-662-45416-9

  • eBook Packages: Business and EconomicsEconomics and Finance (R0)

Publish with us

Policies and ethics

Search

Navigation