| When China entered into a new stage of Socialist Construction, the role of innovation in promoting economic growth was repeatedly emphasized at the beginning of reform and opening up. At the end of 70s of 20th century, Deng Xiaoping emphasized the development of science and education as the guidance of economic development and modernization construction at the Science and Education Symposium. In 1995, CPC Central Committee and State Council promulgated the decision on accelerating the progress of science and technology, in which clearly put forward the strategy of prospering the country through scientific and educational advances in the nationwide. Furthermore, Jiang Zemin and Hu Jintao also emphasized time and again the important role of innovation in promoting economic development. Over the past three decades, China's economic growth had gained remarkable achievements, however, the contribution of innovation, especially the industrial innovation had a lower proportion on it. In addition, compared with developed countries, the integral level of China's innovation still had a big gap between the requirements of social development and actual status. One suggestion is that this issue was caused by the negative factors of institution, however, we thought this explanation was not incomplete. Combined with relative theories, including classical economics, neo-classical economics, new classical economics, new institutional economics, Marxist economics, Schumpeter's Theory and some mainstream theories about division of labor and innovation both at home and abroad, as well as practice analysis, we believe that the determination of the objective, internal and reality basis of industrial innovation is the division of labor, then combined with China's actual situation, making useful studies and discussion on how to promote China's industrial innovation.After discussing the research background, practical significance, current status, ideas, innovations, shortcomings, and relative literature review, the paper is divided into five main sections.Section 1 discusses two theories of division of labor and innovation, and their evolution process. In economic theory, the division of labor and innovation are two different areas, but they have many similarities, such as common meanings, same viewing angle, the basis of explicit propositions of economics, all point to economic efficiency, and can be used to explain the sustainable growth of micro and macro economic entities. Therefore, uncovering and discussing the relationship between division of labor and innovation is the basic theory and framework system of this paper.Section 2 proves that industrial innovation promoted by industrial division of labor. Firstly, defining what is industrial division of labor and industrial innovation, respectively, then discussing some elements of innovation, including entrepreneurship, market demand, capital accumulation, knowledge stock, R & D and institution etc.. Secondly, analyzing the promoting effect of industry division of labor both in horizontal and vertical to the elements of industrial innovation, then deeply discussing the internal drive mechanisms of industrial innovation (or market competition) and the basis of internal promotion (or industrial division of labor), and lastly had the preliminary findings that the industrial innovation has promoting effect on industrial division of labor.By analyzing the Club Innovation, section 3 further explains the promotion mechanism of industrial division of labor in horizontal on the industrial innovation. On the conditions of division of labor in horizontal , firstly, analyzing issues about innovation income protection, unaffordable and spending on innovation during the industrial innovation activity. Scondly, the existence of market competition has prompted the formation of industrial innovation among enterprises as the Innovation Club. Thirdly, compared the main features of the industrial innovation club with the club theory, found that characteristics of industrial innovation such as membership, product sources and usage have met the main requirements of the club theory and the feature of innovation is exclusive and non-competitive, which is a more typical club goods. In short, the club innovation can ease the major difficulties faced in horizontal level of industrial innovation, and enhance the efficiency of both production and innovation.Section 4 analyzes integrative innovation, and then further explains the promotion mechanism of industrial division of labor in vertical on the industrial innovation. Firstly, making assumptions of industrial innovation under the conditions of vertical level, then analyzing possible issues meet in the process of industrial innovation activities, such as the rewards of rnnovation may not be reflected on the final product, innovation subjects of the main chain can not cooperate with each other, from which get the new paradigm of integrative innovation, then discuss its two theory bases of system Theory and Synergetics. Secondly, on the conditions of vertical level, industrial innovation system met the requirement of integrated innovation, therefore, we can drawn the conclusion that the companies had the impulses to form integrative innovation, which could better solve the problems such as innovation collaboration and allocation of innovation income, as well as the model of innovation activities must be followed under the conditions of vertical level.Section 5 on the basis of theoretical analysis and the reality of China's industrial innovation, proposes some ideas and suggestions of industrial division of labor. The ultimate result of this paper is how to improve the level of industrial innovation in China, throng the previous discussion, we find that industrial division of labor does have promotion effort on the industrial innovation, whether in horizontal or vertical level. In addition, by analyzing the status of the domestic industrial division of labor, we also find more mature system in the vertical level and a certain scale of horizontal division of labour all have promoting effect on industrial innovation. However, there are still many problems on the industrial division of labor. From the horizontal level, including market segmentation and convergence of industrial structure under the closed area, regional reorganization barriers, lack of credibility led to weakening of horizontal industrial agglomeration etc.; From vertical level, including the broken of industry collaboration chain, unreasonable revenue distribution under the regional vertical division of labor, the product at a disadvantage in the international division of labor, weak cooperative system of vertical division of labor etc.. Therefore, we propose to optimize our industrial division of labor, to promote club innovation in the process of industrial division of labor and to promote the integrative innovation in the process of vertical division of labor, and the corresponding policy recommendations, respectively.
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