The Rise of Specialized and Innovative Little Giant Enterprises under China’s ‘Dual Circulation’ Development Pattern: An Analysis of Spatial Patterns and Determinants

Abstract

As potential ‘hidden champion’ companies originating from Germany, specialized and innovative ‘little giant’ enterprises (LGEs) have become role models for small and medium-sized enterprises (SMEs) in China and have been considered important actors in the strategy of ‘strengthening and supplementing national supply chains’. Based on the exogenous growth theory of the firm, this article takes the perspective of the ‘dual circulation’ new development pattern of China and analyses the spatial patterns and their determinants of LGEs using the data of national-level LGEs from 2019 to 2021 and the geographical weighted regression method. The following results were obtained: (1) the national-level LGEs show the spatial distribution pattern of ‘east–central–west’ decline and are highly concentrated in the high administrative levels of the cities, especially in the Beijing–Tianjin–Hebei, Yangtze River Delta, Cross–Strait urban agglomeration. (2) The domestic and international circulations jointly affect the spatial distribution of LGEs. Local institutional thickness has the largest and widest impact, followed by local industrial synergy. The impact of global linkage is relatively stable. (3) The impacts of the main determinants have spatial heterogeneity. The positive impact of local government support shows a decreasing differentiation law from east to west, and local industrial synergy is mainly significant in the east area of Northeast China, Bohai Rim, Shandong Peninsula, and Huang-Huai-hai Plain. The spatial heterogeneity of the effect of international circulation comes from the difference in marginal effects among regions and the influence of the Belt and Road Initiative. The positive impact of FDI is mainly concentrated in the northeast and southwest regions. This article highlights the importance of the domestic value chain in the strategy of Innovative China, and proves that varying global-local nexus of cities creates ‘soils’ with varying fertility in which LGEs thrives as well.