A Tale of Two Cities in Regional Entrepreneurial Policymaking: A Comparative Study of Suzhou and Wuxi from a Path-Dependence Perspective

Within the last two decades, the region has reemerged as a focus of innovation processes (Krugman, 1991; Malmberg and Maskell, 2002). In reality, some once-successful regions could be surpassed by other regions in a short period of time because of innovative institutional arrangements. Scholars argue that clusters may undergo an aging process associated with the phenomenon of decline, as observed in the Ruhr area in Germany (Grabher, 1993) or the Zhongguancun Science Park in China (Tan, 2006). Effective institutional innovation tends to become an increasingly important source of competitive advantage in a region. In this sense, policy makers should engage in more positive institutional learning and institutional innovation. In the context of “large scale institutional transition” together with the bureaucratic political system in China, local governments have undertaken initiatives to produce institutional innovation (Yang and Li, 2008). We believe that the theory of path dependence can generate deeper insights into the understanding of regional development and policy making. Therefore, this chapter adopts a path-dependence perspective in order to uncover the mechanisms by which regional development and competition evolve, based on the empirical setting of two second-tier Chinese cities: Suzhou and Wuxi.