Moderating effect of institutions on the relationship between industrial diversification and urban innovation in China: A perspective from evolutionary economic geography

Authors: Bindong Sun*, East China Normal University
Topics: Economic Geography, China
Keywords: evolutionary economic geography, innovation, industrial diversification, related variety, institution, China
Session Type: Paper
Day: 4/11/2018
Start / End Time: 3:20 PM / 5:00 PM
Room: Napoleon, Marriott, River Tower Elevators, 41st Floor
Presentation File: No File Uploaded

The school of evolutionary economic geography regards the industrially related variety as a driving force for innovation, but ignores the moderating effect of institutions. Based on the industry data of 269 Chinese cities during 1998 to 2013, this study examines the moderating effect of institutions and institutional complementarities on the link between industrial diversification and innovation. We find that government intervention in market economy and government support for science and technology can offset the positive effect of related variety on innovation, but can reduce the negative effect of unrelated variety on innovation, especially in small-sized cities; government support for social security and welfare can reinforce the positive effect of related variety on innovation especially in large-sized cities, but government intervention in market economy would offset this moderating effect. These findings imply that urban governments in transitional economies should take account of institutional influence in making innovation policies to maximize the effects of industrial diversification.

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