A Study On Technology Power And Evolution Of Regional Enterprise Networks

With the deepening of the division of labor, the firm networks have become an important vector of economic growth. The practice of regional development both home and abroad has proved that well-developed firm network is a driving force for regional development. Therefore, interests in the evolution of regional firm networks have grown steadily within economic geography and industrial economics in recent years. Some scholars are helping revive those interests in the work of researching the network relations and finding the asymmetrical power relations in firm networks. They think the asymmetrical power relations are very important characteristics in regional firm networks and leading corporations have very important effects on the evolution of firm networks. However, with globalization and development of knowledge-based economy, importance of growth factors is changing. Since 1990s, the importance of traditional network resources such as labor, capital and land has being replaced by technology gradually. Technology has become a core element of the network power. Scholars note the role of power within regional firm networks in empirical studies but insufficiently theorized. Moreover, there has been very little research and analysis on technology power systemically.This paper offers a further contribution to this project by focusing on the technology power and its function. It highlights four problems which, together, provide a more complete view of this issue. First, who is the core in asymmetrical power relationships and why it can be the core? Second, what is the technology power and how it works? Third, how does the technology power work in the process of regional firm network evolution? Fourth, how does the regional firm network form and develop driven by technology power.Based on lots of documents and interviews with firms in Shanghai automobile firm network, the author provides answers to the above questions, and some new findings as well:Firstly, asymmetrical power relationships have been an important characteristics in regional firm networks led by transnational corporations(TNCs) in some developing country. Technology power is much well-marked in those networks, especially in producer-driven firm networks, such as auto, aircraft network. Transnational corporations master key technology, while other corporations in the same network need those technologies for development. Therefore, the former is the core in the networks and has the power to take influence on others. The author calls the core firm as leading firm and the others common firms.Secondly, technology power is a new concept in regional firm networks. The author tries to construct the concept system of technology power for the first time. The author thinks that it needs two preconditions for the action of technology power: one is a big technology gap between leading firms and common firms; the other is relying on the leading firm. Technology power can integrate the function of technology and power together, so the discussion of technology power focuses on two aspects as follow: the ability of control and the ability of study.Thirdly, technology power has remarkable effects on the evolution of regional producer-driven firm networks. Viewing from the angle of economics geography, with technology power, the leading firm can affect other firms' behavior deeply; sequentially drive the evolution of network. One important function is forcing firms to agglomerate in some special region for forming network. The other is diffusing technology to common firms for promoting ability. Technology power can be used by making technology lock-in, setting down the technology standards, giving technology aids, exerting technology spillover effect, and so on. Accordingly, the leading firms have the strong ability of choosing locations, choosing the network members and accelerating innovation.Fourthly, under the effects of technology power, there is a clear path in the evolution of regional producer-driven firm networks. It can be divided into three periods: burgeoning, growing and developing period. Furthermore, the author takes Shanghai automobile firm network for example and finds: in burgeoning period, the leading firms such as Volkswagen, GM can influence their main suppliers to agglomerate and realize process upgrading; in developing period, local firms are asked to join the networks and make product upgrading; in developing period, the leading firms absorb R&D institutions into the network for function upgrading. Finally, technology power promotes the competence of the Shanghai automobile industry cluster.