An innovative region in China: Interaction between multinational corporations and local firms in a high-tech cluster in Beijing

The literature on innovative regions has stressed the role of spatial clustering in the endogenous formation, accumulation, and sharing of knowledge in technology hubs in advanced countries. Little has been written, however, on how spatial clusters may also affect technological dynamics in developing countries where external actors, such as multinational corporations (MNCs), are the main source of new technology. Drawing on studies of innovative regions and technology transfers, we analyzed the interactive patterns between MNCs and local technology actors in China's leading information communication technology (ICT) service cluster in Zhongguancun, Beijing. We found that the relationship between MNCs and local firms is hierarchical, but also interdependent and evolutionary. Local firms' collaboration with MNCs provides them with vital technological and organizational training, which the local firms use strategically to develop their market networks and innovative capacity in the home market. The learning capacity of local firms is vastly improved by the presence of other related enterprises, the research and development facilities, and a developmental state in a market-oriented spatial cluster.