What are the drivers of enterprise diversification in Chinese cities: Coming from path-dependence or path-creation forces?

Abstract

Most studies in evolutionary economic geography considered path-dependence forces that drove regional diversification in the macro level. This view generated debates recently and path-creation forces began to attract large concern. This study focuses on revealing the driving forces of Chinese enterprise diversification in the micro level. It first proposes invention patents as an indicator to measure internal path-creation force on double “spatial-industrial” dimensions based on China Economic Census data and patent datasets in China National Intellectual Property Administration. The study has empirically examined the driving mechanism of enterprise diversification and found that the driving impacts did not have significant differences in path-dependence force, while the effects of internal and external path-creation forces have heterogeneity among industries and regions. It is proposed local governments should formulate targeted strategies to promote enterprise diversification especially in undeveloped western cities.