Crisis-Induced Innovation: Quality Upgrading in Chinese Industrial Clusters
Professor Xiaobo ZHANG
Chair Professor of Economics
National School of Development
Supporting institutions and policies play a key role in facilitating firms to upgrade product quality. However, the emergence of quality-supporting institutions has not been well studied. Based on both qualitative and quantitative evidence in Chinese clusters, this paper shows that quality-enhancing institutions and policies often emerge in response to crises. Crises, such as consumer boycotts and impositions of export barriers, can catalyze collective actions from entrepreneurs and local governments to improve product quality.