A study of China’s inter-city networks for innovation cooperation within software and service firms

Abstract

ABSTRACTIn the last couple of decades, China’s software and services industry has emerged as the driving power of economic growth playing a significant role in leading innovation in China. Research on inter-city network structure, drawing on patent cooperation among cities, helps understand the positioning of cities in terms of software and service-related innovation. This helps guide urban- or regional-development strategy. In this paper, we investigate 22,316 patents of software and service-listed firms. We examine the number of patent applications, technological innovation and development, and the geographical distribution of companies owning patents using Social Network Analysis (SNA). Our results show that: (1) Chinese software and service-related innovation has a notable agglomeration in a few geographically dispersed mega-cities such as Beijing, Shanghai, and Shenzhen; (2) the technological innovation and development of the software and services industry in China is deeply dependent on importing technologies from foreign countries, particularly from the United States and Japan; and (3) the “Industry-University-Research” combination effect of innovation in China is still relatively low. Our policy recommendations include encouragement of cooperation, innovation of investment mechanism, preferential tax treatment of enterprise income tax, and sustainable and improved learning programs for nurturing highly qualified professionals to create an environment for independent innovation and entrepreneurship.