A co-evolutionary process among industrial cluster policy, leading enterprises behavior and industrial cluster innovative capacity: The industry in Quzhou, Zhejiang

Industrial cluster is a form of economic organization which is sited between bureaucracy and market, which plays a critical role in regional, national and even global economic. The development of industrial clusters in China has become a subject of international interest, while the West´s industrial cluster theory seems no longer suitable in the context of Chinese transitional economy. Since the role of government in China is excessive yet, this is completely different from the West. The debate has focused on government efforts to attract FDI to promote industrial clusters and regional development. What role should government play in clusters driven by domestic firms under Chinese transitional economy has been relatively ignored in this debate. Based on the evolutionary perspective, this paper focuses on the context of Chinese transitional economy, making a case study around two issues. Firstly, what role does the government play in “SOE-led cluster” and whether there is any difference of government´s role in two contexts, Chinese transitional economy and western economy? Secondly, what´s the co-evolutionary process among government´s policy toward industrial clusters, leading firms´ behavior and industrial clusters´ innovative capability? Based upon the case study of Quzhou fluorine silicon industrial cluster, results suggest that, on the one hand, the rise and growth of the fluorine silicon SOE-led cluster in Quzhou is not dependent on FDI, but instead of the dynamic interplay of several elements. On the other hand, there is a co-evolutionary process among government´s policy toward industrial clusters, leading firms´ behavior and innovative capability of industrial clusters. In addition, our result has responded to and enriched the theory of government regulation. This paper has made contributions to developing industrial clusters with managerial and practical insights. Also it provides meaningful insights into innovative policy in the co- text of Chinese transitional economy.