Impact of Industrial Linkages on Firm Performance in Development Zones

This article investigates the effect of industrial linkages on firm performance in Chinese development zones, using Jiangsu province as a case study. An ordered response model based on the dependent variable being ordinal was developed. The empirical results reveal an insignificant relationship between industrial linkages and firm performance. Our interpretation of this finding mainly lies with the global and domestic challenges that have changed the way participating firms operate and organize in the development zones of Jiangsu. When many other economic factors take precedence over industrial linkages in driving superior firm performance, firms feel it less important to get closer to their suppliers or customers, therefore weakening the impact of industrial linkages. Although this article primarily focuses on development zones in Jiangsu province, the findings and discussion will provide insights for other development zones in China that may be, reviewing their development strategies because most of them have similar development problems.