A Study On Evolution Of Regional Enterprise Networks Under The Effect Of Multinational Corporations

The practice of regional development in developed countries has proved that a well-developed regional enterprise networks is a driving force for regional development, which has drawn a lot of scholars' much attention both in the fields of management and new economic geography. Earlier studies mainly focused on the enterprise clusters made up of small and medium-sized enterprises (SEMs), ignoring the role of multinational corporations. With the rapid development of economic globalization and trade liberalization, the economic characteristic of regionalism and localism is being weakened. Instead, the different product-making procedures or value chains are distributed in different countries and regions according to the strategic development plan of multinational corporations.Under this background, regional enterprise networks could not develop in isolation, but should participate in the global production network to achieve continuous upgrades. As an important carrier of economic globalization, the multinational corporations are not only the important participants in regional enterprise networks, but also the ligament of coupling the global production network and regional enterprise networks. At the same time, instead of traditional factors such as land, capital and labor, technology factor with mobility features contribute more and more for the development of regional enterprise networks, and has become the critical force affecting the development of regional enterprise networks, while multinational corporations control the vast majority of the most advanced technology. In such circumstances, this paper takes a perspective of multinational corporations, aming to study its impact to the structure and innovation upgrading of regional enterprise networks in developing countries through technology control and technology diffusion by focusing on the technological factors of multinational corporations (production-oriented enterprises), which can serve for the theoretical innovation of economic geography and regional economic development plan.Through analyzing the pertinent literatures at home and abroad, it is easy to find out that technology is becoming more and more important for the formation, development, innovation and upgrading of enterprise networks. Scholars at home and abroad, have started to fix their attention on it. Nevertheless, previous researches emphasize the effect of enterprise networks on technological innovation and technological diffusion. The influence of technological factor on the development of enterprise networks is ignored, especially how multinational corporations affect regional enterprise networks and cluster structure through technology control and technology diffusion. Some scholars have turned their attention to this in recent years. Specifically, they discuss the evolution of enterprise networks in the perspective of network power, technical power and global technical network. With the development of economic globalization, technological factors flow among countries more rapidly. More and more multinational enterprises take their technical activities into an international technology network. Therefore, it is very necessary to explore how multinational corporations impact the evolution regional of enterprise networks by virtue of technological advantage carrying little weight. Moreover, the findings about the relationship between multinational corporations or FDI and enterprise network or clusters are more and more, and the study of how enterprise network and clusters can attract multinational corporations or FDI has become relatively mature. However, the study about how the multinational corporations affect the formation and development of enterprise network or cluster is too meager to form systematic and normative theory explaining the mechanism of multinational corporations'influences on enterprise network evolution. Therefore, it is beneficial to carry out research on this subject. In addition, enterprise network development is not static but changing with the growth of enterprises. Existing researches focus more on the static state of enterprise network than on the dynamic change of the network. How multinational corporations affect the development and evolution of regional enterprise networks through technology control and technology diffusion with the aid of mobility features of technological factors is an important issue.By summarizing and commenting on the previous researches about the investment of multinational corporations, the evolution of enterprise networks and the impact of multinational corporations on the formation, development, innovation and upgrading of enterprise networks, this paper analyses the background, conditions and the way of how the multinational corporations affect enterprise networks, and discusses how the multinational corporations impact the spatial behavior and innovation of the members of the networks through technology control and technology diffusion to conclude the regulation characteristics of regional enterprise networks at different stages. Based on a lot of spot investigations, the development and evolution features of the Shanghai automobile enterprise network are analyzed under the effects of Volkswagen AG and GM. On this basis, in order to further study on how multinational automobile corporations with different relation models between complete vehicle and its parts affect the formation, development, innovation and upgrading of regional enterprise networks to make the result with universality and particularity by relying on technical superiorities, Shanghai automobile enterprises network is influenced by the European and American multinational automobile corporations, and represented by Volkswagen AG and GM. Guangdong automobile enterprises network is deeply affected by the Japanese automobile multinational corporations such as Honda Motor and Toyota Motor. Then the two networks are compared and analyzed. The main conclusions are as follows:Firstly, multinational corporations are important forces of the evolution of regional enterprise networks in the knowledge economy time. With the development of globalization, international division of labour and knowledge economy as well as the concerted driving force of central and local government, the multinational corporations explore resource ceaselessly on a global scale in order to realize resource the process of optimal configuration, of which the most important one is foreign investment accompanied by technology transfer and technology spillover. On one hand, the multinational corporations always set up many technical barriers to other enterprises to prevent the spillover of the key technology, and on the other hand, in order to reduce the production cost and improve the level of localization, they have to provide the regional enterprises with technical guidance and training, which are called technology control and technology diffusion. Through the functions of technology control and technology diffusion, multinational enterprise affect the spatial behavior and innovation learning of the regional enterprises, thus finally influence its network evolution. Of course, the affection relies on certain conditions, which includes appropriate technology gap, a close resource-dependence relation exists between multinational corporations and regional enterprise networks and the support of policy environment.Secondly, the multinational corporations can affect the spatial behavior and innovation of regional enterprises, thus affects the evolution of regional enterprise networks. At the stage of the network formation, the multinational corporations mainly take technology control of the network members. They restrict the local members enter the network, and demand or force former network members to join them. At the stage of rapid development, the technology diffusion from the multinational corporations to members is wider and stronger, which has promoted the rapid development of regional enterprise networks. The demonstration effect makes many other multinational corporations enter the network. At the stage of expanding production, the innovation effect of multinational corporations on network members is the most significant. It attracted many foreign R&D centres into the host country, and the network members become more diverse. Under the effect of technology control and technology diffusion, the number of the network members is increasing, and the density of the network is higher. The network structure has developed from vertical dendritic structure to network structure, and shifted from single-core to dual-core. The relationship between regional enterprise networks and headquarters of multinational corporations has transformed from one-way to two-way linkage. At the same time, the capacity of network innovation is promoted, and the process upgrading, the product upgrading and the function upgrading appear in the regional enterprise networks in succession.Thirdly, the multinational corporations played an important role in the process of Shanghai automobile enterprise network evolution. Two multinational enterprises of VW and GE entered into Shanghai by the concerted driving force of the Shanghai government and local authorities, making Shanghai automobile enterprise network go through non-existence to existence and low-grade to high-grade process. The network structure and innovation capacity of automobile enterprise had obviously been improved and finally developed into a more perfect and competitive one. Specifically, Shanghai automobile enterprise network went from a process of setting up, fast growing and expanding. In the course of forming up, the foundation of automobile industry in Shanghai was poor, so SVW could make use of the technology standard control to lock out the home-grown enterprises. Therefore Shanghai automobile network showed a mononuclear structure with the SVW at the center and with vertical network structure in Initial shape whose network density and creative ability was low. Also, this vertical network structure only had a one-way link with headquarter of VW. At the stage of rapid expansion, the GE began to set its foot in china after the great success made by VW. From then on, Shanghai automobile network had been a dual-nuclei structure. The supplier network had been perfected, and its vertical and horizontal network structure began to improve and product upgrading began to appear. What's more, the external supplier network was expanded but still concentrated in the Yangtze River delta. And the relationship between ShangHai automobile enterprise networks and the headquarters of multinational corporations had transformed from one-way to two-way linkage. At the stage of production expansion, multinational automobile corporations greatly impacted the native network on its creativity. The R&D centres of Multinational complete vehicle manufacturers and their suppliers started to enter Shanghai, making the native network more diversified and begin to appear function upgrading. In addition, the density and connection of Shanghai automobile network had been further strengthened. The vertical and horizontal network structure grew into a complex structure whose supplier scope for other provinces was enlarged. The network slowly integrated into the global production system and began its international expansion.It is easier for local enterprises to enter the network under the effect of European and American automobile multinational corporations than that of Japanese automobile multinational corporations, while the latter faces more intense competition than the former. Besides compared with the European and American automobile multinational corporations, the Japanese ones can set up local enterprises network more quickly, and have stronger and more frequent innovation effect on the regional enterprise networks, but it is available only in the closed supplier network. That is, locking technology of Japanese automobile multinational corporations is becoming more extreme. On this basis, the effect of multinational corporations on the regional enterprise networks evolution is achieved through the influence on spatial behavior and innovative learning of network members, so two local enterprises from Shanghai and Guangzhou were selected as cases, which separately grew up under the effect of multinational automobile corporations with different complete vehicle and its parts models. It would become more scientific and significant through analyzing the differences of the effects of multinational corporations on the local enterprises with different relation models between complete vehicle and its parts affect the formation, development, innovation and upgrading of local enterprises. The results showed that the enterprise of the case in Shanghai under the effect of Europe and America multinational enterprises gave a higher strength of technology diffusion, made the scope of supply larger, more connections to the outside world, and the independent innovation capability stronger than the enterprise of the case in Guangzhou under the effect of Japan multinational enterprises, which played a less important role in the supplier network of Japan multinational automobile companies. In contrast, the enterprise of the case in Shanghai had become a tier one supplier.Through the study on evolution of regional enterprise networks under the effect of multinational corporations through technology control and technology diffusion, the dynamic relationship of multinational corporations function in the evolution of enterprise networks was depicted. The theory of enterprises spatial position selecting was improved in network times, and the new evolution characteristic of regional enterprise networks in developing countries were summarized. At the same time, the differences on how multinational corporations with different relationship of complete vehicle and its parts affect the regional enterprise networks and local enterprises were compared and analyzed. However, the paper was mainly based on the developing countries, and made a research on how the advanced multinational corporations of developed countries affect regional enterprise networks of developing countries, and the study on how the advanced multinational corporations of developing countries affect regional enterprise networks of developed countries is ignored. What's more, the characteristics of dynamic and differences of the general members in networks, which will inevitably affect the technology power relations between multinational corporations and the general members, are ignored too. And the changing technology power relationship between multinational corporations and the general members. These are also the problems requiring further study in the future.