The Research Of One Kind Of Industrial Cluster Under The Perspective Of Division Of Labor And Transaction Cost

This paper aims to investigate the manufacturing clusters in Zhejiang Provincefrom the perspective of both industrial division and transaction costs. Researchmethodology of qualitative analysis and quantitative analysis will be adopted to studythe decisive influence of degrees in differentiation for intermediate products upontransaction costs and industrial division. Based on the above discussion, the paper willalso try to come to a conclusion on the possible evolving directions for such industrialclusters in Zhejiang in the future.The manufacturing industrial cluster in Zhejiang Province is an epitome of smallspecialized enterprises cluster. Through division of labor, its internal specializedenterprises rely on low-cost labor force to make volume-production ofindistinguishable labor-intensive industrial products. But, with increasing labor costs,this industrial cluster in Zhejiang Province is facing severe challenges in the processof sustainable development. The author finds that the manufacturing industrial clusterin Zhejiang Province makes change to relieve pressure, that is, to sharply reduce thenumber of small and micro specialized enterprises and remarkably increase thenumber of large-scale integrated enterprises. What is the reason of this integrationphenomenon appear?Integrated development trend will last?The nature of industrial cluster is the exposure of internal transactions on themarket, which is opposite to the problem proposed by Kos of why enterprises canexist under the market economy. The current internal integration phenomenon ofZhejiang’s manufacturing industrial clusters brought the problem back to Kos’senterprise theory. Therefore, the interpretation of the evolution trend of suchindustries in Zhejiang should use Kos’s research ideas for reference to have ananalysis from the perspective of transaction costs. The paper traced back to theconcept source of the transaction cost and defined it as the coordination cost ofdivision of labor. And the transaction cost model was constructed under theframework of mainstream economics with the transaction cost as a breakthrough point.Finally, a conclusion was drawn through the model analysis that: The specializedsmall enterprise cluster will have an absolute advantage on transaction costs onlyunder the condition of undifferentiated or low differentiated production; while largeenterprises will have the advantage on transaction costs under the condition of high differentiated production. It is concluded in the paper that the number of specializedsmall enterprises in the industrial cluster will continuously decrease in the future andit is inevitable that the number of integrated large enterprises will continuouslyincrease. But the integration trend will have different performances among differenttypes of industrial clusters: The industrial cluster of future textile and apparel mayevolve into a high-end and large-scale enterprise cluster; and the industrial cluster ofelectrical manufacturing may become a new industry cluster with large enterprises asa core and small and medium-sized enterprises as a subsidiary.