Economic governance, dual networks and innovative learning in five Chinese industrial clusters

Abstract

This paper explores the link between governance mechanisms and innovative learning in industrial clusters. We employ a grounded theory approach, investigating five manufacturing clusters in China. Our research identifies the causal relationship between governance mechanisms and innovative learning. In particular, our findings suggest that different governance mechanisms lead to the building of different types of networks (local versus extra-local networks) that explain the explorative versus exploitative learning tendencies of the cluster. We find that: (1) cluster governance has significant influence on innovative learning, thereby suggesting a connection between an institutional construct (cluster governance) and a behavioral construct (innovative learning) that warrants further examination, (2) with an appropriate configuration of internal mechanisms, cluster governance can promote the efficiency of cluster firms’ exploitative learning by coordinating local and extra-local network relationships, and (3) cluster governance mechanisms such as economic hierarchy, local regulation, and association autonomy have unique influences on developing extra-local relationships in a cluster’s dual networks to enhance exploratory learning by firms within clusters.