1. IntroductionSilicon Valley has been well researched as a representative example of an industrial agglomeration in a high-tech industry (Matsubara, 2006; Rugman & Verbeke, 2003; Saxenian, 1994, 2007; Zhang & Kawabata, 2012). Conventional wisdom states that the flexible business practices that matured in the region allowed individuals and companies to take on challenging opportunities without the fear of failure, and by becoming familiar with these business practices, various players were able to gain necessary resources (Kobayashi, 2013). Moreover, the role of the key enterprises in Silicon Valley that were major players in technological innovations, venture spinoffs (Saxenian, 1994), employment creation (Fukushima, 2013; Matsubara, 2006), and venture acquisitions (Nakagawa, Fukuchi, Kosaka, Akiike, Kobayashi, & Kobayashi, 2014) has been noted as extremely important. However, it is not clear whether the aforementioned business practices can be seen in other high-tech industrial agglomerations with a different history of formation. The objective of this study is to deliberate on the software industrial agglomeration in Dalian, China, where the influence of multinational enterprises is very strong, and to explore its characteristics in comparison with Silicon Valley.According to the Dalian Software & IT Service Industry White Paper (Dairenshi Joho Sangyokyoku & Dairenshi Sofutouea Kyokai, 2012), revenues of Dalian's software industry have continued to grow since the establishment of the city's software park in 1998, from approximately 0.6% of Dalian's GDP in 2001 to approximately 8% in 2011. The software companies number about 1,200, and about 120,000 people work in the industry. In particular, the scale of the Dalian software industry ranks ninth among the major Chinese cities although it is second in terms of software exports. Approximately one-third of the overall software industry revenues in Dalian come from software exports, and Japanese firms account for approximately 70% of that.In 2009, Dalian had 31 universities and colleges, with a total of approximately 290,000 students. Around 70,000 students, or 27%, were studying software (Zhang & Kawabata, 2012). Moreover, nine of these 31 schools offer students facilities to acquire skills in both software and Japanese to provide the industry with the necessary skills. On the basis of the ability to supply such specialized individuals, the number of firms, and the composition of revenues, Dalian has been regarded as a software industrial agglomeration driven by Japan-related businesses (Tajima & Furuya, 2008; Tanzawa, 2014; Zhao, Watanabe, & Griffy-Brown, 2009).2. Interview SamplesSimilar to Kobayashi's (2014) study, this study is based on a survey of two Japanese firms and three Chinese firms located in Dalian (Table 1). Interviews were conducted in August 2013 with one or two people from each company for approximately one hour each. Data for this study was extracted from these interviews, which were held in a quasi-structured format, with questions created along three lines. The first dealt with the local outsourcing environment for local software development; the second with the background of Japanese companies, their businesses in China (or the establishment of Chinese companies), and basic information on their products and systems made locally; and the third covered relationships between the Japanese companies and local firms regarding software development.The Japanese samples included a firm that has been in Dalian's software industry park since its inception (J1) and one that entered the park approximately 10 years after its founding (J3). Considering a more dynamic perspective on relationships with Japanese multinational corporations, the C1, C2, and C3 Chinese samples were all local key enterprises. J1 and C1 were paired as a Japanese client for outsourcing software development and its local supplier and so were J3 and C3. …