Equity-based linkages in the evolving process of industry enclaves: a case study of Suzhou Industrial Park, China

ABSTRACT Chinese policymakers have widely established special economic zones (SEZs) as key drivers to attract FDI, and by extension facilitate R&D and technology diffusion to realize industry upgrading. However, to the extent that SEZs might be regarded as enclaves, the extent to which subsidiaries of MNEs foster local linkages and transfer knowledge in SEZs remains unclear. This research investigates the state of the linkages generated by firms that have shareholders from incoming MNEs within an SEZ to see if these linkages show signs of knowledge diffusion in the local area. The empirical research is based on a case study of Suzhou Industrial Park (SIP) through secondary data collection on the equity investment of incoming MNEs within SIP and data from semi-structured interviews. The findings suggest that the organizational network of incoming MNEs in SIP is still internalized, and technology transfer through these linkages is weak – this despite SIP apparently having evolved from an enclave to an urban economic agglomeration.