Enterprise level cluster innovation with policy design

ABSTRACT

An industrial cluster is an important link in the process of industrialization. The existing research is mainly based on the market economy. Our paper considers external policy design for cluster innovation based on the transition from planned economy to market economy in China. This paper finds some enterprises in the cluster are transferred from micro-enterprises to small ones, but does not find clustering from the small enterprise to middle or larger enterprise. Furthermore, our paper explained why such a cluster occurs by applying a semi-parametric counterfactual approach. The results indicate that building cluster zones as upgrading the enterprise structure policy and implementing VAT tax systems as the tax benefit policy has the most proponent role in industrial clustering, whereas increasing the loan/financing as the credit policy has a minor impact, which is not negligible either. Overall, this study explains why clusters shift to high output valued with a high interpretation of up to 97%. The contribution of this paper is not only to describe the time process of micro-to-small enterprise clustering but also to give the policy design how to achieve rapid micro-to-small enterprise clustering.

KEYWORDS:

• Industrial cluster
• policy design
• cluster zone
• VAT (Value Added Tax)
• loan/financing

Acknowledgments

This work is supported by First Class Discipline of Zhejiang - A (Zhejiang Gongshang University - Statistics). The authors also gratefully acknowledge the helpful comments and suggestions of the reviewers, which have improved the presentation.Thanks to Liu Qingfeng's overseas doctoral team.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. Cluster policy approaches were first introduced in the early 90s and spread widely in the industrialized world around the year 2000. Since then, sufficient time should have elapsed to have at least some assured insights about the enduring effects of cluster policies on clusters, regions and economies (Rothgang, Dehio, and Lageman 2017).