Mobilizing scarce resource through social networks: Exploring mechanism that accelerated the growth of the Chinese PV industry

Abstract

This paper explores how the Chinese photovoltaic (PV) industry had grown extremely fast from the middle of 2000s, and successfully dominated the world PV product market, by conducting a detailed field study on the industry cluster of Wuxi area in Jiangsu Province, which involves interviews to more than 42 persons and the questionnaire survey. Whereas prior research has tended to emphasize roles of the central government and entrepreneurial activities of major PV firms, we rather focus on processes that enabled PV firms, including small and medium ones, to get access to the resources such as technology, management know-how, and skilled labors, which were critical for their growth but rare in China. Our study particularly indicates that social networks based on informal and personal relations had taken very important roles for Chinese PV firms to overcome problems derived from scarcity of such critical resources. But it also implies that this process has induced homogeneity of firms and driven intense price competition in the market. The study sheds a light on both positive and negative roles of socially-embedded relations on the industrial growth in developing countries.