Benefiting from external knowledge? A study of telecommunications industry cluster in Shenzhen, China

Purpose – External knowledge should not be limited in one zone or level. Researchers have paid more attention to the perspective of multilevel cluster networks. However, little research has empirically studied the various dimensions of external knowledge. The purpose of this paper is to study different levels of external knowledge, their relation with trade and non-trade interdependence and their relation with different kinds of innovations, namely, exploitation and exploration. Design/methodology/approach – Both quantitative and qualitative research methods were adopted in this study. In terms of the quantitative research method, data were collected from 168 companies in the Shenzhen Hi-Tech Industrial Park of China using convenience sampling. As for the qualitative research method, a total of 35 interviews were carried out in this study. Findings – The quantitative results indicate that different levels of external knowledge in the Shenzhen Hi-Tech Park have different effects. First of all, the results indicate that cross-national connections have a positive influence on trade interdependence, which helps firms to produce exploration. Second, cross-regional connections have a positive influence on both trade and non-trade interdependence, which further help firms to create innovative exploitation and exploration. Third, inter-regional connections have a positive influence on non-trade interdependence, which helps firms to increase innovative exploitation. The qualitative result makes a plausible explanation for the quantitative results. The interview results indicate that as the telecommunications industry has so much to do with China’s national security, there are several initiatives of market protection strategies and political interventions, which help firms to form different levels of knowledge flow in Shenzhen. Research limitations/implications – There are several limitations of this study which primarily relate to the case study method. The results can be contextually generalized to the domestic-oriented cluster in developing countries. Practical implications – This study has several managerial implications. First, this research ensures that it is important to consider the multilevel nature of external knowledge before starting with the decision-making process of a firm in a cluster. Second, all levels of administrators and managers in a company should investigate what kinds of involvement and innovation are needed and most highly valued for organizational development. Third, the research framework of this study can be applied to understand which level of external knowledge influences organizational performance. Originality/value – This study is an initial attempt to provide an examination of external knowledge, organizational involvement and innovation performance of an industrial cluster via a mixed method.