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Does Creative Destruction Work for Chinese Regions?
Author(s) -
Zhou Yi,
He Canfei,
Zhu Shengjun
Publication year - 2017
Publication title -
growth and change
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.657
H-Index - 55
eISSN - 1468-2257
pISSN - 0017-4815
DOI - 10.1111/grow.12168
Subject(s) - decentralization , china , globalization , economic geography , context (archaeology) , economic system , stimulus (psychology) , business , work (physics) , industrial organization , process (computing) , economics , market economy , political science , engineering , mechanical engineering , psychology , paleontology , computer science , law , psychotherapist , biology , operating system
Creative destruction is a key driving force behind industrial development. The continuing process of creative destruction provides an impetus to regional industrial renewal. Our analytical framework emphasizes the ways in which firm exit creates a stimulus for firm entry is complementary to the process of technological change and industrial renewal articulated by Schumpeter who pays attention to how new entrants bring in radical innovation and new products, making incumbents' products and technologies obsolete and forcing them to exit or catch up. Using firm‐level data of China's industries during 1998–2008, this paper seeks to argue that the relationship between firm exit and entry has been constantly shaped by an assemblage of various factors, including not only firm characteristics, but also industrial linkages, and most importantly, national and regional institutional contexts, particularly in the context of China where a triple process of decentralization, globalization, and privatization has resulted in enormous spatial and temporal variations in the economic and institutional landscape.