Institutions, Chain Governance and the Predicament of Local Upgrading: A Case Study of Hangzhou’s Mobile Game Industry

ABSTRACT

This article focuses on one of China’s emerging creative clusters – Hangzhou’s mobile game industry – and investigates the various adaptations this cluster has undergone, as well as the mechanisms underlying the industrial and geographical dynamics within the cluster. Specifically, it examines the power asymmetry of governance in the cluster, paying attention to how chain governance has been shaped by both local and national institutional contexts, affecting local firms’ upgrading prospects and trajectories of industrial development. It is argued that China’s peculiar institutions have shifted the power asymmetry in the mobile game chain in favour of game distributors, allowing them to grab more value than their counterparts in the USA and European Union do. Despite various adaptation efforts made by small developers, they are largely constrained by lead firms with little possibility to move up the chain, which will inhibit further transformation and competitiveness of the industry.

KEY WORDS:

• Upgrading
• governance
• institutional context
• institutional actors
• mobile game industry
• China

Acknowledgments

The authors thank the interviewees involved in this research for their valuable time and the referees for their constrictive comments and useful suggestions.

Disclosure Statement

No protential conflict of interest was reported by the author(s).

Additional information

Funding

This research is funded by the Natural Science Foundation of China (grant numbers 41971154, 41601113, 41701115, 41731278), the “Qianjiang Talent Plan” of Zhejiang Province (2017-Type-C), China, Key Laboratory of Regional Sustainable Development Modeling, Chinese Academy of Sciences (KF2020-18), and Key Laboratory of Watershed Geographic Sciences, Nanjing Institute of Geography and Limnology, Chinese Academy of Sciences (WSGS2020005).