Upgrading Industrial Clusters: Analysis Of A Trade Association Governance Perspective

The dual economic structures in developing countries tend to make traditional industrial clusters get bogged down in low labor cost very easily. In China, increasing prices of factors and the appreciation of Renminbi have been weakening the foundation of traditional industrial clusters'competitive advantage; successive disputes of international trade have been restraining the development space of clusters as well. A variety of data concerning China's being"World Shop"show that at present, the traditional industrial clusters of China have marched at the crucial period for breakthrough by way of industrial upgrading.Realizing clusters upgrading is the necessary requirement for changing the mode of economic growth and carrying out the concept of scientific development in practice. Based on the evolution model of comprehensive clusters; the model of global value chains and the model of innovation system, we put forward the upgrading model from the time dimension,value dimension and organization structure dimension. In our definition,the upgrading of clusters is a process to pursue value added and sustainable development by promote the collective action,innovation capability and support networks. It turns out to be the conversion of business models and development paths.Though traditional theories have put forward the denotation, actors, motive mechanism,development paths and related policies of upgrading, it is very difficult to put it into practice automatically in the traditional clusters of China which restricted by excessive mimicry and unfair competition considering that these theories models all have the theories abstraction, being different in different countries. Therefore, our traditional industrial clusters must open up new path for actors'advance and breakthrough efforts of clusters upgrading.The logic of collective actions lies in obtaining maximum collective efficiency. The historical experiences of advanced countries since the Middle Ages prove that industry associations, which are organized for lowering down contract cost and producing organizational surplus, have natural advantage in obtaining collective efficiency: more unselfish than firms and more economical than government. Clusters upgrading has been proved by the research of Nadiv(1999) and Schimtz(1999,2002) and the practice in the coastal areas of China. So, the autonomy carried out by industry associations is not only a forceful impulse on current clusters upgrading, but also building an economic autonomous base for regional politics civilization and clusters governance. Further, they supply a system security for sustainable development of clusters.Thus, this thesis holds that the essence of cluster upgrading is the conversion of development paths oriented by value. However, the collective actions carried out by industry association are the key to open path's lock-in. In order to reach the aim of cluster path conversion, the collective actions of industry associations should make breakthrough in such fields as cluster innovation, internalization of clustered firms, and the optimization of financing environment for clustered firms.This thesis is arranged as follows:Chapter 1 is the brief introduction of the background, aim, significance, contents of this research, as well as the method that will be applied in the thesis.In chapter 2,based on the literature review , some expressions such as industrial clusters, cluster upgrading, industry association governance are clearly defined for this thesis. This thesis also points out that the essence of cluster upgrading is the development path conversion for best value sharing by way of collective actions. And collective actions by industry associations have not only historical evidences but firm base of practice. In the situation of cluster upgrading, as the actors, the collective actions by industry association is closely concerned with the strategic selection: government orientation or market orientation for cluster development, which is great significance for local governments of China to say goodbye to the habitual thinking that cluster upgrading is pushed by government's actions.Chapter 3, on the base of understanding that the self-perfection of market orders need a process and opportunity, build a model of cluster path conversion which is based on the coupling of path dependence and butterfly effects, and it is tested by the case study of cigarette lighter industrial clusters in Wenzhou. The research proves that the governance of industry associations is both the key to cluster path conversion and synergistic evolution process of firm's growth and development.Chapter 4, beginning with the theoretical analysis of both sides----the model of knowledge outflows and the model of synergistic competition game, put forward that the governance of industry associations is the key to solve the difficulty of cluster innovation in China. Empirical studies show that industry associations could not only play irreplaceable role in collecting and spreading of information; technical training and testing; core sharing technology, but play other key role in industry development planning; industry standard setting; safeguarding of intellectual property rights; educating talents with high and new technology; collectively finding new ideas and rebuilding innovative modes, etc.,Chapter 5, starting from the theories related to the internationalization of medium and small enterprises, comprehensively discusses the entrance, features and difficulties of clustered firms for internationalizing. Systematically analyzes the active functions of industry association for push enterprises'internationalization from the three aspects: the embedding mode of global value chains; position keeping and position risingChapter 6, after having reviewed and evaluated the difficulties and solutions of financing for medium and small enterprises, combined with theoretical analysis and case studies, put forward that clustered industry associations have more advantages of information and collective forces, and the insurance companies and internal channels for investment and financing set up by them may bring a lot of benefits to growing medium and small enterprises with the industry.Chapter mainly discusses the building of industry associations. The advantages of industry association lie in supplying local public goods. However, local public goods are more a problem of regional autonomy than an economic problem. Due to the lack of autonomy tradition in China, under the situation of double shortage of legal system supply and government empowering, clustered industry associations usually have a weak capability of governance. Therefore, strengthening the governance capability of industries, besides the building of system within industry association, more emphasis should be put on the supply of legal systems and the change of administrative ideas, which makes industry associations become real regional autonomous industry organization served for enterprises.