Evolution of innovation systems of two industrial districts in East Asia: transformation and upgrade from a peripheral system and the role of the core firms, Samsung and TSMC

This study investigates the dynamic evolution of the innovation systems of two industrial regions in Asia, namely, Hsinchu in Taiwan and Suwon in Korea, including their respective core firms, TSMC (Taiwan Semiconductor Manufacturing Company) and Samsung. Patent data analysis shows that the regional innovation system (RIS) of the two regions is different from the peripheral or immature RIS characterized by a high reliance on foreign knowledge resources. Hsinchu and Suwon have achieved an upgrade in terms of increased localization, technological diversification, and science-basedness, obtaining a high level of knowledge convergence (originality). This upgrade is accompanied by the enhancement of the core firms' technological capabilities, confirmed by the increasing trend of self-citations and the decreasing citations of foreign-held patents, as well as increasing localization and diversification of the surrounding region excluding the core firm. Furthermore, Hsinchu is more comparable to a Marshallian innovation system than Suwon because of its higher degree of knowledge localization and intraregional collaboration and less concentration than the latter. Recently Hsichu tend to show some signs of increasing concentration. This finding implies that both regions converge to an HaS structure but with the path-dependent persistence of the initial differences between this structure (Suwon) and a Marshallian one (Hsinchu).