Scandinavian Working Papers in Economics

Papers in Innovation Studies,
Lund University, CIRCLE - Centre for Innovation Research

No 2013/8: Systematic anchoring of global innovation processes and new industry formation – the emergence of on-site water recycling in China

Christian Binz (), Bernhard Truffer () and Lars Coenen ()
Additional contact information
Christian Binz: Swiss Federal Institute of Aquatic Science and Technology, Dübendorf, Switzerland
Bernhard Truffer: Swiss Federal Institute of Aquatic Science and Technology, Dübendorf, Switzerland
Lars Coenen: CIRCLE, Lund University; Nordic Institute for Studies in Innovation, Research and Education (NIFU), Norway, Postal: CIRCLE, Lund University, PO Box 117, SE-22100 Lund, Sweden

Abstract: Understanding why and where emerging industries locate in today’s globalizing economy is a much debated topic, especially in the context of the recent evolutionary turn in economic geography. This paper proposes a new perspective based on the technological innovation system (TIS) approach. It argues that existing theories on industry formation could be extended with a systemic and multi-scalar view on the social construction processes in the very early industry formation phase. It hypothesizes that regions which successfully locate new industries combine the build-up of a territorial embedded TIS with drawing on innovation dynamics from other regions of a globally distributed TIS. A respective analytical framework is introduced and exemplified with a case study on on-site water recycling technology, based on interviews with 40 experts in Beijing, Shanghai and Xi’an, China. Our data suggests that a considerable on-site water recycling industry developed only in Beijing, which seen from existing theories on industry formation provided the least favorable initial conditions. Its success appears to be explainable with a local innovation system build-up process that recurrently and effectively anchored global TIS dynamics in its local context. We conclude by discussing how the proposed framework can enhance the understanding of industry formation and argue for a systemic innovation policy approach for supporting new industries

Keywords: Industry formation; anchoring; technological innovation system; clean-tech industry; on-site water technology

JEL-codes: O31

39 pages, March 3, 2013

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