Abstract
Drawing on knowledge-based theory and spatial production network, this paper explores how local protectionism in China influences the effect of spatial knowledge spillover from knowledge-intensive business services (KIBS) on manufacturing clients' innovation performance. Using a large panel data set covering 283 Chinese prefecture cities and municipalities from 2003 to 2013, we applied input-output analysis to quantify the spatial knowledge spillover based on production linkages. The empirical results verify a prominent 'border effect' of the spatial knowledge spillover from KIBS in China, which is significantly positive within a limited distance of no more than 250 kilometers. Notably, the spatial knowledge spillover is positively correlated with manufacturing firms' scale, and cross-region KIBS more significantly improves the innovation performance of their manufacturing clients than local KIBS. This paper contributes to a comprehensive understanding of the relationship between KIBS and manufacturing firms in China's specific institutional context.
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