Are Knowledge Bases Enough? A Comparative Study of the Geography of Knowledge Sources in China (Great Beijing) and India (Pune)

Abstract

Using firm-level data collected through a survey in 2008 followed by semi-structured interviews with firms in 2009–2010, this article systematically compares the geography of linkages of the software industry between two regions, one in India (Pune) and one in China (Great Beijing). In contrast to what the literature on knowledge bases and regional innovation systems argues the paper points out to marked differences both in the organization as well as in the geographical spread of the knowledge sources in the software industry between Pune and Greater Beijing. The paper suggests that the literature of knowledge bases could benefit from incorporating the insights from strategy studies as well as innovation systems studies.

Acknowledgements

This project has been financed by the Swedish Research Council (421–2006-2332). The author thanks Monica Plechero for her help with the tests of significance used in this paper. All errors are the sole responsibility of the author.

Notes

Some of the research questions that were driving the project were the following: Within a particular industry, what is the role of Indian and Chinese firms in terms of innovation activities? Are they truly innovators or just imitators of what the industry world leaders are doing? What can we expect in the future, in terms of innovation, from firms in China and India?

According to Pavitt's (1984) view, the geography of knowledge flows is also influenced and characterized by different industrial patterns depending on the specific driver of technological change prevailing in an industry. For the project we decided to include a science-driven industry (green-biotech); scale-intensive (automotive sector), and specialized supplier (software industry).

For simplification, in this paper, we use the term Great Beijing to refer to this extended Jinng-Jin-Ji region.

A firm may have more than one manufacturing unit or facility.

The latest, funded in 1950 and part of the Council for Scientific and Industrial Research, is recognized as one of the most important research-oriented academic institutions in India in the field of chemical and biochemical sciences, and it is well known for its flourishing patent activity and the numerous contract researches, consultancies and training services offered not only to Indian firms but also to foreign MNCs (Basant & Chandra, 2007).

In the sample related to Great Beijing region, 17 firms are located outside the regional borders.

In India, most of the firms that answered the questionnaire were mainly pharmaceutical companies developing drugs rather than pure green-biotech companies. Therefore, the data of the two regions could not be compared.

All the questions in the questionnaire referred to activities conducted the year before, in this case, 2007. Previously to this question on sources of knowledge, the firms were asked about their most important innovation in 2007 (product/process/organizational). The question of linkages naturally followed that line of enquiry, so the firms could refer to the most important innovation.

Interview with a principal researcher of a small spin-off company specialized in speech solutions and speech recognition (10 November 2009).

In a sense, the behaviour of the firms in Pune is very consistent to what we would expect from the knowledge-based approach. Auto parts industry, as an industry dominated by synthetic knowledge bases, relies more strongly on local sources of knowledge and technology than software firms, which rely strongly on international sources.

Interview with the Director General of the Mahratta Chamber of Commerce (13 August 2009).

Interview with the CEO and co-founder of a small software company in Pune specialized in software for the stock exchange (14 August 2009).

Interview with the President and Executive director of a large software company in Pune (13 August 2009).

Interview with the Executive Vice-president, business development, of a large IT firm in Great Beijing (11 November 2009).

Interview with the Director, Global sales & Marketing, of a large Chinese/American software firm (13 November 2009).