Electronic information industry, clustering and growth: empirical study of the Chinese enterprises

Purpose – Firm growth in industry clusters is a complex issue. On the one hand, industrial clusters can promote firm growth. On the other hand, they can restrict the growth of a firm in some aspects. Their various effects have to be analyzed in detail. The purpose of this paper is to examine these effects and the law of enterprise growth in electronic information industry clusters of China. Design/methodology/approach – This paper makes use of the panel data of the Chinese manufacturing industry with the intention of testing Gibrat's law. It carries out an empirical analysis on the influence of Chinese electronic information industry clusters on firm growth. Findings – The result of the present research indicates that industry clusters definitely have a positive impact on firm growth, profit and longevity. However, in regard to the firms' data of China 2006 to 2007, the electronic information industry clusters have negative effects on scale of business growth of small and medium‐sized companies but not big companies. Moreover, the innovation of companies inside a cluster could not catch up with that of companies outside the cluster. Originality/value – For the electronic information enterprises, growth rate is positively correlated with the enterprise age. Gibrat's law is tenable, that is, firm growth mainly depends on firm age. In Chinese electronic information industry clusters, R&D has only a weak influence on enterprise growth. In contrast, the economic soundness of the region where the electronic information industry clusters are located is more beneficial to the growth of enterprises in the cluster.