ABSTRACT
Technological innovation as an important means tomaintain sustained economic growth has attracted much scholarly attention in recent decades. The internal mechanism of innovation has remained controversial in spite of the extensive research work that has been done both theoretically and empirically (Fagerberg 2005). Recent theoretical attempts to understand the dynamics of technological innovation have placed much emphasis on the process of localized knowledge spillover in developed economies and technological transfer in the developing world (Döring and Schnellenbach 2006; O’Mahony and Vecchi 2009). However, the notions of localized knowledge spillover and external technological transfer have both been focused on the inter-firm knowledge exchange and technological linkages without giving adequate consideration to other important influential factors intrinsic to the formulation of innovation strategies. This chapter examines the growth and innovation dynamics of China’s
software industry based on the results of a firm-level questionnaire survey conducted during 2006-07 in Beijing, Shanghai, and Shenzhen – the three most innovative city-regions in China that harboured one-third of software firms and produced nearly half of the total software industry profits of the country. The remainder of this chapter is organized into four parts. It begins with a critical evaluation of the competing interpretations of the dynamism of technological innovation in developed and developing countries. This is followed by a clarification of our own research design and methodology. The third part examines the general pattern of China’s software industry, including its spatial distribution, structural characteristics and economic performance. Attention is then turned to the comparative study of the innovative and non-innovative software firms to probe into the influence of localized knowledge spillover and external technological transfer on innovation as well as other factors that explain why certain firms have turned out to be more innovative than others. Important findings of the research are highlighted and their theoretical implications discussed at the end.
