Evaluation of Technological Innovations and the Industrial Ecosystem of Science Parks in Shanghai: An Empirical Study

Abstract

Science parks and innovation policies have a major mission in driving innovative resources and nurturing emerging industries, while the government-academia-industry collaborations and the establishment of an ecosystem are essentials. To investigate the key driving forces for sustainable development of the collaborative ecosystem, this article evaluates the technological innovations and the ecosystem of Science Parks in Shanghai based on historical data obtained from Shanghai Zhangjiang Science Park (Zhangjiang Park in short). Systems thinking and causal loop analysis are adopted to explore the structure of the collaborative ecosystem and reflections of the policy impact on the science park. The role of the government in science parks and innovation ecosystems is identified with systems mapping and empirical study. The economic impact of Zhangjiang Park policies and the performance of innovation activities in Shanghai are further evaluated. Lessons learnt from the benchmarked science parks and policy implications for facilitating the innovation ecosystem are addressed.

Keywords

Innovation ecosystem policy sustainable development Science Park systems thinking

Introduction

Science parks and innovation policies have a major mission in driving innovative resources and nurturing emerging industries, while the government-academia-industry collaborations and the establishment of an ecosystem are essentials. Many practices in the world has led to the establishment of science parks, accelerating the transfer and transformation of scientific and technological achievements, and effectively promoting the gestation and development of regional high-tech industries (Pan, 2014). In addition, sustainable innovation of ecosystem has been identified as the critical driving factor for industries to compete and thrive under highly intensive global competition (Yan et al., 2018). More and more scholars combine ecosystem theory with science parks, by considering enterprises and organisations as members and main actors in the ecosystem, and apply various laws and characteristics of ecosystem development to theoretical research and practical guidance. Based on the theoretical perspective of the ecosystem, the competition and interaction between the enterprises and other organisations form an interactive network, which enables the enterprise and the park to develop together (Pan, 2014). During the development of many science parks, the government plays an important role. Therefore, government policies are related to the development of the park. Hence, the study on the development of science parks also needs to measure the effectiveness of government policies.

Since the mid-1980s, China has explored the establishment of various types of science parks. Thirty years of development has led to positive outcomes (Pan, 2014). Zhangjiang Park is very representative and known as ‘China’s Silicon Valley’. Founded in 1992, Zhangjiang is located in the south-central part of Pudong New Area. After the implementation of the policy of ‘focusing on Zhangjiang’ in 1999, the park, led by the information and biomedical industries, had started a high-speed development stage. In 2010, the total operating income of the park reached RMB 110 billion, making it the leading area of high-tech industrialisation in China. In 2012, with the ‘Comprehensive Evaluation of Shanghai Development Zone’, Zhangjiang Park ranked the first in the overall ranking. In August 2017, Zhangjiang Science City Construction Plan was officially approved. Based on Zhangjiang Park, Zhangjiang Science City is transforming into a place of creation of new knowledge and new technologies and a breeding ground for new industries in China and the world. The case object in this article is ‘Zhangjiang Park’, which is ‘Zhangjiang Science City’. Since the relevant name in the yearbook has not changed, ‘Zhangjiang Park’ is still used as the reference object (Chen & Liu, 2014a).

Collaborative mechanism is the essence of innovation ecosystem, and the collaborative mode of government–academia–industry has gradually become the principal mode of innovation ecosystem development. In order to study the government–academia–industry collaborative ecosystem under the innovation-driven economy, this article evaluates the technological innovations and the ecosystem of Science Parks in Shanghai based on historical data obtained from Shanghai Zhangjiang Park. Systems thinking and causal loop analysis are adopted to visually explore the structure of the collaborative ecosystem and reflections of the policy impact on the science park. Zhangjiang Park mainly has seven industrial clusters, including a new generation of information technology, high-end equipment manufacturing, bio-industry, new energy industry, new energy auto industry, new materials industry and energy-saving and environmental protection industry (Chen & Liu, 2014a). In Shanghai Statistical Yearbook 2018, Zhangjiang Park accounted for 8.68 per cent of the main business income, 8.44 per cent of foreign trade and 7.65 per cent of invention patents of Shanghai General Science Park in 2017. The science park has always been a promoter of the high-tech industry, a diffusion of technology and a source of economic and productive growth.

This article adopts the case study method of selecting typical science parks to scientifically evaluate the ecosystem of science parks, the economic impact and innovation policy with statistics. The role of the government in science parks and innovation ecosystems is identified with systems mapping and empirical study. The economic impact of Zhangjiang Park policies and the performance of innovation activities in Shanghai are further evaluated. Finally, lessons learnt from the benchmarked science parks and policy implications for facilitating the innovation ecosystem are addressed.

Literature Review

In recent years, research on innovation ecosystems has become popular. Scholars try to combine innovation with the ecosystem, building an innovation ecosystem to create jobs and stimulate better economic performance, thus promoting the country’s development. The concept of an innovation ecosystem was first derived from a report issued by the US President’s Council of Science and Technology in 2004—‘Maintaining the country’s innovation ecosystem, information technology manufacturing and competitiveness’, which states that the country’s technological and innovation leadership depends on a vibrant and dynamic ‘innovation ecosystem’ rather than a mechanical end-to-end process (PCAST, 2004). Jackson observes that ‘a dynamic innovation ecosystem is characterized by a continual realignment of synergistic relationships of people, knowledge, and resources’ (Jackson, 2011). Accordingly, an innovation system is a system of resources, talents, institutions and infrastructure that combine new ideas or technologies, services and production processes.

Research on innovation ecosystem of science parks mainly focuses on the construction of evaluation system, model establishment and empirical research. With the further development of innovation ecosystem theory, open innovation ecosystem becomes the mainstream of enterprise innovation. Yun et al. (2018) divide modern economy into three sub-economies: small and medium-sized enterprises (SMEs) and start-up enterprises, closed and open innovation in the market, large enterprises and social open innovation. Yun et al. (2016) propose that all innovation based on the inflow and outflow of technologies, knowledge and ideas crossing the boundary of firms is considered 'open innovation'. It is also the intended target of the OCE (Open innovation, Complexity adaptive system and Evaluation change) model. Sun Hongchang (2007) establishes the innovation ecosystem model of the development zone and analyses the problems affecting the innovation development of enterprises in the ‘second entrepreneurship’ of the development zone by combining the analysis method of ecological niche in ecology. He Yanzi (2007) studies from the perspective of regional innovation system and proposes a complete structure based on the innovation system of agricultural science parks. However, there is still a lack of research on the growth of innovation ecosystem and the contribution of platforms to the system, and Park (2017) puts forward a new conceptual framework of ‘complementary’ multi-platform innovation ecosystem theory, aiming at the above problems (Kwak et al., 2018).

Different index systems are desgined to evaluate the innovation ecosystem of the park according to various influencing factors, but most of the evaluation systems can be classified into two categories: one is the evaluation obtained from the input, output and factor flow of the park. The second one is the evaluation obtained from the stability, sustainability, system structure and complete function of the park system (Chen & Liu, 2014b). A multi-level fuzzy comprehensive evaluation method is used to evaluate the health of regional technological innovation ecosystems with an empirical study on SuZhou science park (Miao & Huang, 2007). A fuzzy analytic hierarchy process is adopted to evaluate the suitability of technological innovation ecosystem in GuangXi beibu gulf economic zone (Nong, 2012).

The academic research on innovation ecosystem of science parks is still in its infancy, and the connotation of the innovation ecosystem of science parks has not been uniformly defined (SH Municipal People’s Government, 2001). Many types of models and evaluation systems have been proposed, while there are no universally recognised representative achievements. Therefore, based on the theory of innovation ecosystem, this article takes Zhangjiang Park as an empirical case, using systems thinking methodology to evaluate government policy and put forward corresponding suggestions that raise the overall level of science park innovation ecosystem.

The Role of the Government in Science Parks and Innovation Ecosystems

One of the major driving forces for the success of Zhangjiang Park is the government organisation and policies. Shanghai has issued a number of regulations to promote the development of Zhangjiang Park. The establishment of the Zhangjiang Park Leading Group is responsible for the approval of investment projects and capital construction projects in the park according to the authorisation of the relevant administrative departments and institutions of the city and Pudong New Area. It also performs functions and duties of identifying achievements in high-tech transformation projects of high-tech enterprises, software enterprises and integrated circuit enterprises in the park; coordination of other administrative departments on the day-to-day administrative management, annual inspection and implementation of preferential policies for enterprises in the park; and providing various necessary services for enterprises in the park (Zhangjiang Management Committee, 2011). In addition, there is a Science and Technology Innovation Department, which is responsible for the following developments:

The creation of national independent innovation demonstration parks, national Torch Innovation Experimental City, National Standardisation Demonstration Park and National Intellectual Property Demonstration Park.

The introduction, management and service of high-tech talents in the park, including the construction of overseas high-level innovation and entrepreneurship talent base, the work of key contacts of the Overseas Chinese Affairs Office, the management of talent apartments, the construction and management of postdoctoral workstations and the joint postgraduate construction of culture grounds, construction of biomedicine and information technology engineers training bases.

Organising various scientific and technological activities in the park.

With the support of the leadership team and the Science and Technology Department, Shanghai has launched policies to promote the development and innovation of the park, as well as the close links between innovation and academia.

It is undeniable that the development of science parks has improved the performance standards of technological progress, promoted technology research and development and technology transfer, and provided strong scientific and technological support for economic and social development. At the same time, it has advanced the industrial structure of Shanghai and provided resources for the development of high-tech industries, focusing on information technology and biomedicine. In the information technology industry cluster, the integrated circuit industry and chip design are leading domains. In recent years, Zhangjiang has also become a leader in the field of cultural and creative industry. Figure 1 shows the operating revenue of information technology and cultural and creative industry. The growth rate of cultural and creative industry has reached 290.4 per cent in 2017 compared with 2009, followed by information technology, with a growth rate of 221per cent.

According to the government’s policy, Zhangjiang Park not only provides incubation space but also a professional intermediary service organisation to provide policy advice, industry guidance and other services, as well as legal advice, technology and equipment support, to create a credit culture and an environment conducive to innovation (Zhangjiang Management Committee, 2013). For example, Shanghai Zhangjiang cultural, technological and creative industry base provides office space for more than 50 cultural and creative enterprises at a low price close to ‘zero rent’. On 31 December 2013, Shanghai Steel Union e-commerce Co., Ltd., received an economic enterprise subsidy of RMB 389,000 from Zhangjiang park. With the support of preferential policies, the number of high-tech enterprises in the park has been growing steadily in the past decade, as shown in Table 1. From 2017 to 2018, another 41 start-ups have come up in Zhangjiang Park, achieving extraordinary growth.

Figure 1

Source: Statistical Yearbook of Shanghai Pudong New Area (PNA) (2009–2018).

Table 1

Number of High-Tech Enterprises in Zhangjiang Park (Unit: unit)

Item Year	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017
Number of high-tech enterprises	226	305	333	366	443	550	596	679	740	763

Source: Statistical Yearbook of Shanghai Pudong New Area (PNA) (2009–2018).

Systems Analysis of an Innovation-Driven System with Science Park Policies

In this section, systems thinking is used to identify the elements and feedback loops that exist in an innovation-driven system. By refering to the system model built by Yan et al. (2018), the model in this article is obtained through interviews with interdisciplinary research teams, relevant policy researchers and management committee of Zhangjiang Park. Thus, the causal loop diagram has a reasonable basis.

Policies that promote the coordinated development of ecosystems aim to achieve this long-term impact and sustainable economic development. The methods of systems thinking and long-term perspectives can ensure that policy implementation is consistent with expected results. Many previous works have pointed out that systems thinking can visually show the process of problem generation, which enables us to better understand and solve problems. From an operational point of view, systems thinking uses causal loop diagram to describe the behaviour of the system, and the interaction between the different variables forms reinforcing and balancing feedback loops. The effects of the mechanisms of the different feedback loops are discussed below. First, we review the feedback loops under market-driven systems and the impact of technological innovation and business development on economic performance. Second, it also proposes what kind of policies should be introduced by the government to strengthen the government–academia–industry synergy under the innovation-driven mode and discuss the meaning of promoting self-reinforcing ecosystem from a systematic perspective.

Market-Oriented Systems Analysis

Previous research has shown that technological innovation and the development of new business models are the driving force for market growth and industrial economy. Technological innovation drives the development of business models. The important role of business models is to unlock the potential value of technology in the early stages and to capture as much value as possible and turn technology into market revenue (Chesbrough & Rosenbloom, 2002). Because technological innovation alone does not guarantee a company’s commercial success, it has no innate value. No matter how great technological innovation is, it cannot bring satisfactory profits to the enterprise before commercialisation. Enterprises must realise the commercialisation of innovative ideas and research and development results through business models, so as to continuously gain competitive advantage (Chesbrough, 2007, 2010). Market growth is bound to bring more cash flow into technological innovation, which is an efficient and benign cycle. Therefore, it is necessary to determine the key variables in the development of science parks and the potential feedback mechanisms in the high-tech industry ecosystems.

In this article, five conceptual variables are considered to be key drivers of an innovation-driven economic ecosystem: (a) technological innovation; (b) competitiveness of industrial clusters; (c) new business development; (d) economic performance; and (e) government policy. First, technological innovation is the first commercial success of new technologies, which is a continuous process of ‘R&D-commercialization-diffusion’ (Chen & Zheng, 2009). The competitiveness of industrial clusters includes the relative competitive advantage of a specific industry cluster to drive technological innovation and new business developments. Third, the development of new business refers to how technological innovation is related to the market and business model. There are patent conversion rates involved. Fourth, economic performance is often linked to market size and main business income. Finally, government policy includes science and innovation policy, fiscal policy and export promotion policy. The following systematic analysis describes the relationship of these key variables.

The market-oriented feedback system of technological innovation, business development and economic performance with the dynamics of major performance is described as shown in Figure 2.

Figure 2

Source: Data of Number of Patent Authorizations (unit: item), R&D Expenditure (unit: one hundred million yuan) and Sales Revenue (Unit: one hundred million yuan) is collected from China Torch Statistical Yearbook (2014–2018).

Policy Analysis of the Innovation-Driven Ecosystem

Three policy implications to enhance the self-reinforced ecosystem and sustainable innovation-driven economic development have been identiﬁed as shown in Figure 3.

First, the science and innovation policy could continuously enhance the reinforcing feedback loops for technological innovation and its further impact. Accordingly, reinforcing feedback loops R1-1, R2-1 and R3-1 could be sustained to strengthen the feedback effects of innovation-driven economic performance, competitiveness and business development. In addition, balanced feedback loop B4-1 can be formed, which reduces the cost of alternative technology and encourages various technologies and further innovations. Second, the fiscal policy could enhance the innovation-driven competitiveness through the reinforcing feedback loop R1-2. It is an intuitively reasonable practice that special investment and tax reductions are offered to leading industries. However, from the systems perspective, the common practice might trigger two balancing feedback loops (B2-2 and B3-2) that could possibly restrict the development of new business and technological innovations. The coverage of these fiscal policies is too narrow and normally offer preferential treatment to mature enterprises of a certain scale. At the same time, the investment and financing policies and loan policies are more inclined to high-profit enterprises with strong solvency. There is little practical effect in incubating unprofitable enterprises. Less opportunities for new business development and a higher opportunity cost for alternative technologies might be incurred and become a resistance to further innovation. Third, the export promotion policy to economic performance could help to strengthen the reinforcing feedback loops R1-3. The policy has a positive effect on expanding overseas markets, leading to better industrial income and economic performance, and expanding investment in technological innovation.

Figure 3

The Ecosystem of an Innovation-Driven Economy with Science Park Policies

To be more specific, the above-mentioned policy implications can be explaind in detail:.

First, science and innovation policy. This policy includes three aspects: (a) talent policy—it includes the introduction of outstanding talents and industry leaders, the improvement of living facilities and supporting services for scientific and technological talents, housing subsidies and talent apartments for outstanding personnel. The average rent of talent apartment is about RMB 1,500/month, which is 65–80 per cent of the market price. (b) Industry-University-Research policy—the aim of the policy is to further improve the effectiveness of industry–university–research cooperation among enterprises, universities and research institutes in the park to improve the independent innovation capacity. The main forms of industry–university–research cooperation include co-construction of enterprises, co-construction of joint laboratories, establishment of industrial technology innovation alliance and joint training bases for graduate students. Shanghai light source, soft and hard X-ray free-electron laser device, Li Zhengdao Research Institute, Zhu Guangya Research Institute and Zhangjiang Park of Shanghai Jiaotong University gather here. (c) Service optimisation policy—the government encourages professional intermediaries and industry associations to enter the park to answer questions and provide suggestions for the development of the park. The government is improving the enterprise service platform of the park, implementing ‘zero fees’ for administrative approval and service projects, cultivating and forming the credit culture of the park enterprises and encouraging self-assessment, self-discipline and self-maintenance of credit platforms. By the end of December 2008, 5,213 enterprises in the park had enjoyed the preferential policy of ‘zero fees’ for administrative approval and service projects in 5 years. The total amount of free payment reached RMB 20.22 million, and the direct payment of the park accounted for 62 per cent of the total amount.

Second, fiscal policy. It includes two aspects: (a) Tax policy—since December 2015, the state administration of taxation has issued ten measures to vigorously promote the development of Zhangjiang Park, such as the introduction of ‘inventory system’ tax reduction and exemption policy for foreign talents. Enterprises identified as high-tech type in the park can enjoy 15 per cent of the corporate income tax, compared with 25 per cent of the corporate income tax outside the park, the company’s operating costs are greatly reduced. (b) Financial policy—through the Pudong New Area Science and Technology Development Fund, the government further increases the special investment in the park’s technology industry, in the form of subsidies, investment, loan interest subsidies and financing guarantees, to support the high-tech enterprises, science and technology project development resulting in the transformation of technology services in the park. It also provides key support for the leading industries in the park and provides profit subsidies for high-tech industries (Zhang et al., 2014). Shanghai minimally invasive Xinmai Medical Technology Co., Ltd., received a total of RMB 21.271 million government subsidies in the year of 2019. Extraordinary profit and loss of Shanghai Fudan Zhangjiang biomedical Co., Ltd is usually constituted by government subsidies and investment income.

Third, export promotion policy. According to the available data, Zhangjiang Park has relatively few policies for export, mainly international promotion. That is, the government will enter the global market by means of media and network promotions. The export policy is not very supportive so far, while the export performance of the park is not ideal enough.

The Economic Impact of the Science Park Policy

This section analyses the economic impact of the Science Park policy based on the statistical data provided by the Shanghai Statistical Yearbook, Shanghai Pudong New Area Statistical Yearbook and Shanghai Science and Technology Statistical Yearbook. Of course, government policies also play an important role in the development of science parks. Zhangjiang Park forms an industry dominated by information technology, biomedicine and cultural creativity. In 2017, the output value of the three industries were RMB 284.5 billion, RMB 63.3 billion and RMB 156.3 billion, respectively, accounting for 57 per cent, 62 per cent and 43 per cent of the whole Pudong New Area. As an important part of information technology industry, integrated circuit achieved output value of RMB 70.4 billion, accounting for 87 per cent of Pudong New Area and 33.3 per cent of the national total. There are also leading enterprises emerging here, such as SMIC, Huada semiconductor, Huahong semiconductor, etc. By the end of 2017, there were 613 Zhangjiang biomedical enterprises with 42,000 employees. Among the top 10 pharmaceutical companies in the world, 7 have set up R&D centres in Zhangjiang (such as Roche, Pfizer and Novartis), where major infrastructure clusters have been formed. Zhangjiang is the first national digital publishing base in China, with the industrial characteristics of digital publishing, animation film and television, online games, pan entertainment and digital creative technology. The park gathers a large number of excellent cultural and creative enterprises at home and abroad, including Shanda literature, Dazzle cartoon, Blizzard Entertainment, etc. Government-led science parks can obtain better resources and financial support, thereby promoting technological innovation and business development, as well as strengthening the competitiveness of industrial clusters and bringing better economic performance.

Economic Value Added and Export Delivery Value of the Science Park

In this section, the economic impact of high-tech industries in science parks on the reginal economy is measured by the two economic indicators of sales revenue and export delivery value. As shown in Figure 4, from 2006 to 2017, the main business income of all science parks in Shanghai reached 138 per cent growth in 2017 compared with 2006. The growth rate of Zhangjiang Park in 2017 was 537 per cent compared with 2006. As can be seen from the figure, Zhangjiang Park began to explode in 2014. The growth rate in 2014 increased about 40 per cent compared with 2013. This was the year when the state required Shanghai to establish a science and technology innovation centre. Since the implementation of the ‘focus on Zhangjiang’ strategic decision in Shanghai in 1999, Zhangjiang Park has entered a stage of rapid development. In 2013, part of Zhangjiang Park was included in the Shanghai Free Trade Zone. In 2014, as the core carrier of Shanghai to build a science and technology innovation centre with global influence, Zhangjiang Park was included in the national independent innovation demonstration zone. This double benefit has brought Zhangjiang Park a historic opportunity for transformation and development (Producing City Hope, 2018). The park seized the opportunity and resorted to the science and innovation policy, which led to the development of new business and industrial cluster competitiveness in the park. The main business income significantly improved in this year and has been growing steadily in recent years.

Figure 4

Source: Shanghai Statistical Yearbook (2007–2018) & Statistical Yearbook of Shanghai Pudong New Area (PNA) (2007–2018).

The economic indicator of export delivery value is mainly used to measure the relative position of Zhangjiang Park in the global market. As shown in Figure 5, value of trade export over the past 10 years has been observed (from 2006–2017). Overall, from 2006 to 2014, the overall trend of export trade volume of all science parks in Shanghai has risen. As the global economy fell into recession in 2015, it was in a downturn then. As far as Zhangjiang Park is concerned, the global economic recession in 2015 did not have a big impact on the export of Zhangjiang Park. Among the trade export projects, the three major exports of Zhangjiang Park are (a) integrated circuits; (b) software industry; and (c) biomedical industry. The fact that the export delivery value of Zhangjiang Park has been on the rise since 2014 indicates that Zhangjiang’s market is expanding overseas. However, it should not be overlooked that Zhangjiang’s share of Shanghai’s exports is still relatively low, so the government’s policy on Zhangjiang’s foreign trade needs to be revised and strengthened.

Figure 5

Source: Shanghai Statistical Yearbook (2007–2018) & Statistical Yearbook of Shanghai Pudong New Area (PNA) (2007–2018).

The current policy of Zhangjiang Park in international trade only involves international promotion. Compared with other science parks, foreign trade policies are, indeed, less, and the export delivery value of science parks has performed poorly in recent years, so the government should strengthen the use of policy tools in foreign trade exports. In terms of reducing the operating costs of enterprises, it is possible to increase the progress of export tax rebates and exempt foreign trade enterprises from warehousing and storage costs. In terms of trade promotion, government should support enterprises to participate in overseas exhibitions and cross-exhibitions and local exhibitions. In expanding overseas marketing channels, it can support companies to establish channels abroad to promote cross-border payment, distribution and solve overseas legal and financial issues.

The implementation of foreign trade policy will not only bring better economic performance but also increase investment in technological innovation, bring about technological upgrading and adjust the industrial structure. This series of system elements form a reinforcing feedback loop, allowing the system to develop in a positive and healthy direction.

Employment in Science Parks and Output Value of High-Tech Industries

As shown in Figure 6, the output value of high-tech industries in Zhangjiang Park has been rising steadily. In 2017, the output value of high-tech industries in Zhangjiang Park accounted for 10.51 per cent of that in Shanghai. The development of high-tech industries has led to an increase in the number of enterprises in the park. There are more than 10,000 enterprises here, providing a large number of jobs.

It can be observed from Figure 7 that in 2017, compared with 2006, the growth rate of employees at the end of the year in Zhangjiang Park was 142 per cent, and the growth rate of this indicator in all science parks in Shanghai was 22 per cent. In 2017, the total employment of Zhangjiang Park accounted for about 7.14 per cent of the total number of people in all science parks in Shanghai. The output value of high-tech industries in Zhangjiang Park accounted for 10.51 per cent of Shanghai’s total high-tech industry output. Overall, 7.14 per cent of the labour force was able to contribute about 10.51 per cent of the total high-tech output value in Shanghai.

On the one hand, the increase in the number of people employed has eased the pressure on employment. On the other hand, the employed people are also human capital. Under the guidance of the government’s science and innovation policy, the cultivation of human capital helped to enhance the scientific research capabilities, strengthen the scientific and technological innovation and promote the structural adjustment and industrial innovation. The above data show the high added value and economic impact of the high-tech industry in Zhangjiang Park.

Figure 6

Source: Shanghai Statistical Yearbook (2009–2018) & Statistical Yearbook of Shanghai Pudong New Area (PNA) (2009–2018).

Figure 7

Source: Shanghai Statistical Yearbook (2007–2018) & Statistical Yearbook of Shanghai Pudong New Area (PNA) (2007–2018).

As can be seen from Figure 7, the employment of Zhangjiang Park has increased negatively since 2015. Due to the low-volume ratio of Zhangjiang Park’s early planning and design, the nature of the original industrial land is difficult to change, which makes the construction of supporting housing, primary and secondary schools, kindergartens and other facilities difficult. The rationing area is more difficult to solve,which is a major challenge to the security sector. At the same time, the preferential scope of talent policy is limited to senior leaders and core talents. However, a large number of middle- and lower-class personnel, especially a large number of young talents, do not have talent support and preferential policies to afford the higher lifestyles of Zhangjiang Park. The high cost of living has become an important reason for the retreat of scientific and technological talents (Producing City Hope, 2018).

Combined with the above-mentioned systems analysis and data, on the one hand, Zhangjiang Park can further expand the coverage of national policies, appropriately adjust the talent policy, expand the policy coverage of the population and retain a well-structured talent team for Shanghai. On the other hand, it is necessary to increase the supporting supply of demonstration areas to ensure innovative investment in scientific and technological talents. It is suggested that the government can improve living conditions to expand resources as much as possible, so that the middle- and lower-level talents and young talents who are part of the main workforce of the Zhangjiang Park can fully participate in the innovation work (SH Municipal People's Government, 2001).

Innovation in High-Tech Industries in Science Parks

The final result of the three reinforcing feedback loops R1, R2 and R3 in the above systems analysis explain the importance of technological innovation. Government policy intends to strengthen academia–industry links and facilitate innovation.The speed of technological innovation is accelerating in Zhangjiang Park, which improves corporate technical standards and meets market requirements.

Innovative Research and Development Intensity

Since R&D activities are directly related to the allocation of the capital and resources of enterprises and governments, accurately understanding the impact of R&D investments on corporate performance has great practical significance for policy formulation (Li, 2018). Chen et al. (2014) conduct a research using the 3-year panel data from the China Industrial Enterprise Database to show that R&D investment can significantly promote the improvement of company performance. Zhang and Li (2009) use the 5-year data of 71 high-tech industry listed companies after 2003 as a sample. The statistical conclusions prove that the company’s R&D expenditure has a positive impact on the company’s efficiency in high-tech industries. In a modern society with fierce competition, R&D investment can enhance the company’s ability to innovate, thereby maintaining market competitiveness and bringing better economic performance.

Ensuring a stable investment in R&D spending will strengthen technological innovation, thereby maintaining or improving the competitiveness of industrial clusters. For companies, R&D expenditure is the key to capturing market share. As shown in Table 2, according to the data obtained in the yearbook, the proportion of R&D personnel in Shanghai to the total number of employees has remained at around 20 per cent since 2015. The proportion of R&D expenditure in Shanghai to Shanghai's main business income has increased year on year. For Zhangjiang Park, R&D expenditures in 2011 and 2012 were RMB 18.51 billion and RMB 20.9 billion, respectively. In 2016 and 2017, R&D expenditures reached RMB 38.29 billion and RMB 44.34 billion, respectively. Zhangjiang Park’s R&D expenditure growth rate in 2017 increased about 139.5 per cent compared with 2011. The growth rate of R&D expenditure has been greatly improved, indicating that scientific research technology has played a key role in the development of Zhangjiang Park.

At the same time, the government’s fiscal policies are also supporting corporate R&D, mainly in R&D funding and credit support policies. Most of the policies promoting technology generation are R&D funding policies, in the form of major special funds, SME innovation funds, industrial innovation funds and industrial technology alliance funds, but the policies supporting R&D institutions are relatively lacking (Ling & Gu, 2015). Policies to promote the development of science and technology are mainly based on credit support, and new types of financial support measures like the promotion of risk institutions is insufficient. In response to the above situation, the following recommendations are made: first, increase support for institutions carrying out research and development. To promote Zhangjiang’s high-tech industrialisation and independent innovation process, the most important factor is the market-oriented R&D institutions. Second, vigorously carry out technology banking business. It is necessary to encourage commercial banks to set up technology sub-branches in the park and rely on the advantages of many technology-based SMEs in the Zhangjiang Park to carry out technology banking business. Third, strengthen the guiding function of government subsidies. Financial funds can be leveraged through supporting cooperative R&D, especially among enterprises, universities and public R&D institutions, and establishing a competitive distribution mechanism of government science and technology funding (Xu & Zhang, 2013).

Table 2

R&D Personnel and R&D Expenditure of Shanghai

Year Item	2012	2013	2014	2015	2016	2017
R&D personnel of shanghai (Unit: person)	208,800 (14.46%)*a	226,800 16.21%	236,800 17.47%	242,700 20.95%	254,800 21.47%	262,300 22.74%
R&D expenditure of shanghai (Unit: a hundred million)	679.46 (3.82%)*b	776.78 4.30%	861.95 4.43%	936.14 5.36%	1049.32 5.52%	1356.2 6.36%

Source: Shanghai Statistical Yearbook (2013–2018).

Notes: *a: percentage of R&D personnel of Shanghai municipality in total numbers of employees in Shanghai municipality during the year.

*b: percentage of R&D expenditure of Shanghai municipality in main business income of Shanghai municipality during the year.

Financial policy supports the R&D of alternative technologies, which improves the innovation ability of enterprises, thus maintaining industrial competitiveness and bringing better economic benefits. At the same time, more economic revenue will enable the government to launch more and more preferential fiscal policies.

Patent Development and Innovation

Innovation is the process of transforming research and development into new technologies and products driven by market demand and technological development. Patents are designed to promote, protect and disseminate technological innovation. According to statistics, the number of patents granted in Zhangjiang Park and Shanghai increased steadily from 2012 to 2017. The number of patents in Zhangjiang Park increased by 147.4 per cent from 2012 to 2017, while Shanghai saw a 41.3 per cent growth in this index. As a national intellectual property demonstration park and the first batch of ‘national patent navigation industry development experimental park’, Zhangjiang Park has achieved remarkable results in the establishment, application, protection and management of intellectual property (Pengpai News Network, 2017).

Meanwhile, it can be seen that the number of patents in Zhangjiang Park accounts for about 7 per cent of the number of patents in Shanghai, which is not high. It can be seen that the effect of industry–university–research cooperation in Zhangjiang Park is not ideal. For enterprises, due to the high input of human and financial resources in the transformation of scientific and technological achievements, they pay more attention to the production of mature technologies and products, and they are not enthusiastic enough about the transformation of scientific and technological achievements. Moreover, the key evaluation elements of universities and scientific research institutions are patents, papers and prospective technical research.There is a lack of market- and industry-oriented incentive measures to encourage technical personnel to conduct research and development in the market. Due to the lack of talent flow mechanism of industry–university–research integration, the channels of industry–university–research integration are not smooth, and the transformation effect of scientific and technological achievements is not ideal.

Table 3

Number of Chinese Patents Granted

Year Item	2012	2013	2014	2015	2016	2017
Number of patents obtained in Zhangjiang	2,251	2,195	4,015	4,206	4,661	5,570
Number of patents obtained in Shanghai	51,508 (4.37%)*c	48,680 4.51%	50,488 7.95%	60,623 6.94%	64,230 7.26%	72,806 7.65%

Source: Shanghai Statistical Yearbook (2013–2018) & Statistical Yearbook of Shanghai Pudong New Area (PNA) (2013–2018).

Note: *c: Percentage of numbers of patents in Zhangjiang Park in numbers of patents in shanghai municipality.

In response to this situation, support for production, education and scientific research needs to be increased by the government. The first is to formulate relevant supporting policies to encourage researchers to actively carry out market-oriented R&D to meet the needs of industrialisation. Second, strengthen organisation and coordination, realise dividend incentive, fully mobilise the enthusiasm of the three parties to participate in the transformation of scientific and technological achievements, jointly complete the task of technological innovation and realise the benefit sharing of the industrialisation of the results of the production, education and research.

Science and innovation policy aims to strengthen the relationship between government and academia, promote technological innovation, maintain the competitiveness of enterprises and make the system enter a virtuous circle.

Industry–University–Research Policy

In December 2005, Shanghai municipal education commission approved the establishment of Zhangjiang joint training base for graduate students. This is the only joint research base in Shanghai with the park as the reporting unit. The first goal of the base is to build a large-scale platform for production, learning and scientific research by relying on the resources of universities and joint training projects (Yu, 2011). For universities, high-tech enterprises in Zhangjiang Park provide a large number of employment opportunities, and universities also provide a large number of professional talents for Zhangjiang Park. The second is to build a system combining industry, education and research, and create a high level of human resources, so as to effectively improve the talent training, research and innovation and the energy levels of leading industries in the park. Third, through the efficient operation of the industry–university–research platform, the construction of domestic well-known graduate joint training base can transform the park into an internationally competitive high-tech park. Meanwhile, in order to strengthen scientific research capacity, the government has launched a number of innovative policies:

Co-construction of joint laboratories: Spreadtrum Communications (Shanghai) Co., Ltd., has established a joint laboratory with the Zhangjiang Microelectronics Research Institute of Peking University to conduct industry–university–research cooperation, in order to realise the sharing of information and technology. Zhangjiang campus of Fudan University has been successful in developing the school of software, the school of microelectronics, the State Key Laboratory of special integrated circuit and system, etc. Zhangjiang Park of Shanghai Jiaotong University is building a superfast science centre, material genome joint innovation science centre, synchronous radiation diagnosis and treatment innovation platform, etc. In 2019, several projects including Microsoft artificial intelligence and Internet of Things laboratory, Alibaba Shanghai R&D centre, Fangda pharmaceutical Shanghai new laboratory have been completed and put into operation.

Establishment of Industrial Technology Innovation Alliance: The ‘China Intelligent Terminal Security Industry Alliance’ established in 2015 and located in Zhangjiang Core Park is composed of 11 well-known enterprises¹ and research institutes such as ZTE, Tencent, Ali Yun OS, and Shanghai Communication Manufacturing Association. The organisation is committed to strengthening cooperation in production, education and research in the fields of chips, operating systems, software and mobile applications and promoting the construction and improvement of industrial technology innovation systems. At present, Zhangjiang Park has cooperated with more than 20 multinational enterprises, more than 200 investment institutions and more than 1,000 local technology enterprises, such as Bosch, General Electric, IBM, Unilever, Dow, Novartis and Zeiss, and established cooperation with more than 20 overseas resources.

Relying on the University Science Park to cultivate the industry: Some high-tech enterprises that have not yet grown up need to enter the university science park for incubation. For example, the National Science Park of Fudan University attracts start-ups and growth companies of electronic information, providing them the service of project declaration, technology transfer and information seeking. The National Science Park of Shanghai University of Science and Technology is based on the idea of ‘one garden, multiple bases, integration of production, study and research’ and provides three major service projects for entrepreneurial support, technology finance and technological innovation (Zhou, 2017).

Establishing an innovative transformation platform: The platform aims to integrate various innovation and entrepreneurial elements to create transformation and incubation of scientific and technological achievements. The Shanghai Jiaotong University Zhangjiang Park started construction in April 2018 and is currently under intense construction. According to Zhangjiang public statistics, Zhangjiang joint incubation platform has become a highly concerned business incubator, with more than 15,000 start-up projects screened and 4 projects incubated, with a total valuation of more than RMB 3 billion.

Scientific special projects: In order to further create a scientific research atmosphere in Zhangjiang Park and promote the construction of innovation system, the government provides support for academic seminars and other academic exchange activities.

Conclusion

Understanding the structure of an innovation ecosystem is crucial to policy implementers and participants for setting growth strategies and effective execution. To effectively promote innovation-driven industrial development, policymakers and managers need to continuously evaluate the value creation process in terms of economic performance, innovations, and global values through comprehensive performance indicators. When the actual results are found to be very different from the expected results, adjustments of the science and innovation policy should be considered in a dynamic perspective. In this study, Zhangjiang Park is among one of the most successful science parks in Shanghai, while the systems mapping of the ecosystem is important to support the developments of Zhangjiang Park. For the sustainable development of science parks and innovation-driven economies, it is necessary to identify potential feedback structures that exist in ecosystems from a systems perspective. Policymakers can thus identify appropriate policies having a positive impact on technological innovation, business development, market competitiveness and economic performance through an ecosystem of feedback loops. At the same time, the balancing feedback loop that exists in the system is still worth noting to avoid/reduce policy resistance. Therefore, systems thinking and causal loop analysis are adopted to evaluate the impact of policies from a holistic point of view. In the case of the economic impact and innovation of the Zhangjiang Park, the concepts of main business income, export delivery value, employment, high-tech industry output value, R&D intensity and patent development were introduced.

According to the case study of Zhangjiang Park and Shanghai in this article, the policy implications are applicable to be a reference to other parks supported by the government. The research shows that the government has an irreplaceable influence on the industry cluster and innovation of the science parks. The government policy promotes the development of high-tech performance industries with high performance through the construction of soft and hard environment. Although the science park is essentially a new form of industrial organisation, its development reflects the functional role of the government (Wu & Li, 2009). Based on systems analysis and case study of Zhangjiang Park, this article identifies several policy implications for improving innovation ecosystems.First, the government has incentives to promote industrial clusters and innovation-driven industrial development according to the characteristics and advantages of local industrial development, and the concept of collaborative ecosystem (government–academia–industry) should be embedded in the policies. Second, constructing an appropriate performance evaluation and indicator system and the linkages with dynamic performance management mechanism can better represent and assure the progress of industrial development. Third, it is necessary to systematically understand the potential feedback loops of innovation-driven ecosystems and identify key success loops instead of individual factors. By analysing the reinforcing feedback loops and the balancing feedback loops, it is possible to strengthen the growth trend and clearly point out the shortcomings of the current policy for improvements. An effective policy evaluation and implementation will further improve the development of science parks and high-tech industries, including science and innovation policies, fiscal policies and export promotion policies. For future research, it is recommended to adopt more innovative and practical indicators with empirical studies and data analysis for specific industries and strategic development.

Author Contributions

Conceptualisation, Min-Ren Yan and Haiyan Yan; methodology, Min-Ren Yan; investigation, Lingyun Zhan and Xinyue Yan; data curation, Mengen Xu; writing-original draft preparation, Min-Ren Yan and Lingyun Zhan; writing-review and editing, Haiyan Yan; visualisation, Xinyue Yan; supervision, Min-Ren Yan; project administration, Haiyan Yan.

Footnotes

Declaration of conflicting interests

The authors declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.

Funding

This research received supports from Shanghai Municipal Education Commission-Plateau Discipline and the Ministry of Science and Technology in Taiwan.

Note

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