ABSTRACT

Research in economics, sociology, technology innovation and entrepreneurship has advanced our understanding of the factors that generate regional advantage. A rich literature has chronicled the tendency for research and development efforts of organizations to ‘spillover’, aiding innovation efforts across organizations co-located in a small geographic region or ‘cluster’ (Jaffe et al. 2000). These spillover effects occur across and within industries (Jaffe et al. 2000) and are accelerated within geographic regions (Jaffe et al. 2000). These effects are further amplified when key participants in a region are public research organizations (such as universities) committed to norms of open science and information disclosure (Dasgupta and David 1994; OwenSmith et al. 2002). Studies of regional advantage have also emphasized the myriad dense connections that knit together high-tech clusters (Saxenian 1994). In addition, research shows that organizations that are ‘co-evolutionary’ leading to a virtuous cycle through mutual inspiration (Marten 2001) are bound amidst the tension between competitive and cooperative forces, develop strong links driving innovation and market development (Brandenburger and Nalebuff 1996). The effects of co-evolution are further increased when strategic alliances connect local participants (Zhao et al. 2009). Consequently, both Kogut (2000) and Brown and Duguid (2000) argue that, in a technology cluster, the network of relationships among participants is a primary conduit of knowledge flow. Therefore, the joint and contingent effects of geography and network con-

nections are crucial to the innovative capacity of science and technology parks or ‘clusters’. However, we do not understand what network relationships are more crucial in driving the maturation of domestic firms. In this context, how does institutional embeddedness apply? Can we identify factors that help achieve ‘embeddedness’ and subsequently broader domestic success? These are the questions we will seek to answer in this research by carefully examining the highly successful Dalian Software Park. Dalian Software Park (DLSP) has been instrumental in the accelerated

development of the industry in Dalian as well as the software industry in

China and the Asia Pacific region. DLSP was established in 1998 in a small area of approximately 3 square kilometres. It is located near Dalian University of Technology and Dongbei University of Finance and Economics – both highly recognized in China. The park has grown into a community encompassing residential, commercial and educational zones. In addition, the Neusoft Institute of Information Technology was established in 2000 as a joint venture between DLSP and Neusoft, the largest IT company in China. Neusoft Institute of Information Technology now has more than 12,000 students majoring in technology-related areas who live and study on campus. Currently, firms within the park support 45,000 employees and 37 Global 500 companies operate on the site. The majority of the firms in DLSP are involved in application software development and business process outsourcing activities.