This research has analysed China’s knowledge economy through an investigation of key features of the labour market of knowledge workers in China’s largest high technology science park, the Zhongguancun (ZGC) science park in Beijing. The investigation has focused so far on three principle areas of research. Firstly, the extent of "openness" of labour markets in terms of mobility and the degree to which diverse careers and specialisation are rewarded in the labour market. Secondly, the networks and networking activities knowledge workers are engaged in and the role these play in learning and diffusing knowledge has been of particular interest. Thirdly, the research has explored the university-industry relationships in the Science Park, both in terms of their importance to the innovation strategy of the firm and in relation to the nature of the networks that may exist between the two. In contrast to much of the mainstream literature of innovation, in this study knowledge workers are considered as the central focus of the innovation process and labour markets of knowledge workers as a key institution that underpins the Chinese innovation system.
The empirical data was drawn from two inter-linked surveys undertaken between February and April of 2006 in Beijing’s Zhongguancun science park. The first survey was based on questionnaires with heads of R&D departments in 71 companies. The sample consisted of indigenous Chinese ICT companies, undertaking innovation[1] and located in the ZGC area of Beijing. Senior R&D managers were then asked to nominate R&D employees in their organisations, who were then approached to complete a second survey. In total 381 knowledge workers from the 71 projects participated in the survey. In addition, focus group interviews were organised in a total of eight hardware and software companies located in the ZGC science park. The protocol involved semi-structured interviews, with focus groups of senior R&D managers and non-senior R&D employees in each company.
Initial descriptive analysis of the surveys suggests that broadly defined "external knowledge" plays a key role in new knowledge sources for firms, thus underlining the importance of networked structures to maximize access to knowledge sources and the efficiency of knowledge flows. In particular, tacit knowledge, through new recruits and conference participation are highlighted. On the other hand, low scores by respondents to customers and clients as sources of new knowledge suggest that supply-push type innovation activity may predominate. Interestingly, working in overseas companies is a preferred career option, suggesting overseas employers may be able to cream off higher skilled staff.
Diversity of career options are emphasized by the ease with which a high proportion employees say they would find jobs in other companies in similar areas, although when employees are required to combine skills and move into different areas, ease of inter-firm movement is reduced. Both mobility and experience outside of the firm, (as well as tenure) show a positive impact on earnings. These results suggest that many of the institutional features that characterised the labour market of scientific and technical employees in the State controlled planned economy era have given way to a highly fluid labour market. The labour market also differs significantly from its Japanese equivalent that was defined by strong internal labour markets in the high skilled end sector.
The research on networks focuses on exploring different mechanisms knowledge workers use to access outside knowledge and on the recognition and reward of these activities within organisations. Three specific types of networking activities are distinguished; Searching and scanning involves searching the latest technological and/or managerial techniques. These may form the basis of future collaboration, provide knowledge of the competition or simply act as a benchmarking exercise. Inter-organizational problem solving (IOPS) refers to individuals that play a prominent role in bridging the cognitive gaps that can exist in collaboration around specific innovation projects. Finally, relational networks are associated with networking activity that essentially relies on personal relations of knowledge workers. Summarising the regression results, it was found that participation in formal networking does not attract a wage premium. Similarly, employees that turn to their personal networks to problem-solve also fail to attract a premium. On the other hand, activities that focus on searching and scanning do appear to attract a wage premium, but this occurs only amongst management employees.
The next step was to investigate if and what type of networking activity impacts performance on innovation projects. Here the dependent variable becomes the performance of the innovation project, as reported by senior R&D managers, using a construct of performance measures on a specific innovation project. In this model, the public/private ownership structure of the firm and size of the firm are also introduced as control variables. The result showed that, once again, of the three networking activities, only searching and scanning appears to have an impact on performance. Furthermore, size of firm is not significant, although ownership is highly significant, explaining some 15% of innovation performance. The manner in which this was coded signifies cooperative enterprises are more successful than privately owned firms in the innovation projects.
Human capital theory would argue that scanning and searching activity attracts a wage premium because, in contrast to formal IOPS and personal networking, it is the only networking activity that positively impacts innovation outcomes. The more efficient activity associated with Searching and Scanning is reflected in a wage premium. However, why certain networking activities impact performance more than others requires further explanation. A resource-based approach might suggest that, while organisations will be reluctant to engage in inter-firm collaboration to share their core competence, engagement with the outside environment that does not usually involve sharing detailed knowledge, increases the firm’s absorptive capacity and dynamic capability. This may be especially evident where the need to keep up-to-date with technological and market developments is paramount. A transaction cost approach might argue that, in comparison with informal mechanisms of gathering information, formal inter-firm collaborations carry a high transaction cost. This may also explain the lack of significance for the IOPS coefficient. The ineffectiveness of relational networking may result from the peculiarly cultural traditions of Guanxi relationships in China, whereby the use of personal networks carries a growing reciprocal obligation, hence a high transaction cost.
A third area of study concerns the nature of links between universities and firms, and in particular the hypothesis that the success of Chinese ICT firms is linked to their privileged access to academic institutions and the special networks created by employees and academics. Overall, the quantitative and qualitative data (detailed above) show that universities and research institutes are seen as important institutions to be associate with, although this appeared to be for reputational reasons rather than to support innovation projects directly. No compelling evidence was found from the data that that the university is central to, and positively and directly influences innovation activity. Indeed, secondary evidence increasingly suggests that, primarily for governance reasons, the Chinese national innovation system is now marked by looser university/industry institutional ties, in contrast to the situation a decade ago.
