1. Introduction
“Embeddedness” has become an effective theoretical tool to understand the process and mechanism of interactive coupling between transfer enterprises and host clusters, as well as global/cross-regional production networks [
1]. In the past 20 years, with the revival of new urban regionalism [
2,
3,
4], based on the theory of “embeddedness” [
5], economic geography has ushered in the prosperity of cultural turn, relationship transfer, and institutional change and evolution, which has opened up a new world for understanding and revealing the broader institutional mechanism of regional economic activities [
6,
7,
8,
9]. Institutional embeddedness has become an important direction for understanding the transformation of social and economic development [
10]. In 2008, the financial crisis triggered a new round of global industrial transfer, and the city region became the competitive subject of industrial transfer [
11,
12]. Decentralization has become an important force affecting the change of regional economic patterns, and regional enterprise transfer has become an important economic geographical phenomenon [
13]. Meanwhile, diversified industrial policies and institutional arrangements have become an important competitive way for the new round of industrial restructuring [
14,
15,
16], and the government also plays an important role in promoting regional industrial transfer [
17]. China is a big country with strong government capacity and significant regional differences. Focusing on industrial transfer and regional coordinated development, the Chinese government has issued a large number of industrial transfer policies, trying to promote the industrial transfer of developed regions to backward regions through administrative force, so as to promote the industrialization and economic growth of these backward regions. For example, in 2005, Guangdong Province issued opinions on the joint promotion of industrial transfer between the mountainous areas and the east and west wings of Guangdong province and the Pearl River Delta (for Trial Implementation), guiding the industrial transfer of the Pearl River Delta to the mountainous areas of East, West, and North Guangdong. Also, in 2005, Jiangsu Province issued opinions on accelerating the industrial transfer between the north and the south, guiding the industrial transfer from southern to northern Jiangsu. Additionally, in 2010, the State Council issued the guiding opinions of the State Council on undertaking industrial transfer in the central and western regions to guide the industrial transfer from the eastern coastal areas to the central areas. However, a large number of theoretical and empirical studies show that there is no large-scale transfer of policy expectations in China’s industry, and the regional development gap has not been significantly improved [
18,
19]. Why does industrial transfer lag behind theoretical expectations and policy expectations? How does industrial policy drive industrial transfer? These have become urgent questions that need to be answered both in theory and in reality.
The academic circle has carried on the thorough analysis on the reason for slow industry transfer in developed areas, which mainly includes four factors: first, labor flow offsets the comparative cost advantage of underdeveloped areas, and enterprises can obtain enough labor force, especially high-quality labor force, in developed areas. The second is the location stickiness caused by enterprise agglomeration. In the long-term development process, enterprises form path dependence. At the same time, enterprises can realize a self-enhancement mechanism through the scale effect and cyclic cumulative causal effect of clusters, so as to restrict the transfer of enterprises [
20,
21]. Unless a strong external shock occurs, path dependence cannot be changed [
22,
23]. The third is the differences of institutional environment factors, mainly including the difference between formal and informal institutional environments, such as government administrative efficiency, labor level, investment and tax policies, cultural and ideological concepts, etc. [
24]. Fourth, the administrative division between the state and local governments directly issue policies to hinder the transfer of enterprises [
1,
25,
26], particularly for many local governments so as to protect the region’s industries. In recent years, economic geographers have carried out in-depth research on enterprise transfer from the perspective of institutional embeddedness. They believe that enterprise transfer cannot be simplified as a process of cost selection but rather as a more extensive process of institutional embedding [
27]. The institutional environment has also had huge impacts, such as labor price, market size, production network, innovation ability, spatial organization, etc., on the receiving place and the local embeddedness behavior of the transferred enterprises [
28,
29]. A great number of papers have discussed the influence mechanisms of institutional environmental factors such as social relation embeddedness [
30,
31,
32,
33], production network embeddedness [
34,
35], local complex [
36], and national relation network [
37] on enterprise transfer.
However, the relevant research focuses heavily on the enterprise, paying the most attention to the impact of the relationship embeddedness between the government and the enterprise, as well as between the enterprises on the enterprise transfer [
29,
38]. Few studies pay attention to the impact of institutional embeddedness between state and local government arrangements regarding firms’ migration [
7,
39], Additionally, too much emphasis is often placed on top-down institutional arrangements, ignoring the informal institutional environmental differences between regions [
40]. As such, a full understanding of industrial transfer under different local institutional environments has not yet been established. In addition, some studies have shown that the same dialect and various other historical and cultural factors can enhance the mutual trust of economic subjects, helping to break the market segmentation and to optimize the allocation of regional resources [
41]. According to this, the same dialect should enhance mutual trust between governments, improve the effectiveness of institutional embeddedness, and promote government cooperation and regional enterprise transfer. In fact, Under the background of the fiscal decentralization system in China, the main reason for the failure of the policy arrangement of enterprise transfer (sluggish) is the intergovernmental competition caused by administrative segmentation [
42,
43]. The way in which to break the “institutional path dependence” of administrative division is directly related to the role of the government and the effect of industrial transfer [
44,
45]. As early as 2005, in order to get rid of the serious urban system isolation, the provincial government coordinated and implemented the industry transfer policy of Counterpart Assistance between cities. This policy established a one-to-one counterpart assistance mechanism between the Pearl River Delta and the cities in East, West, and North Guangdong and has driven the firms of the Pearl River Delta to East, West, and North Guangdong through goal-oriented policy arrangements. It also provides a rare sample to study the impact of institutional embeddedness on firms’ migration from the perspective of cooperation between governments. Does the one-to-one institutional arrangement between cities promote the transfer of regional industries? How can the institutional embeddedness between state and local governments be improved? This paper takes the industrial transfer of Guangdong Province as an example to demonstrate these.
To answer these questions, by crawling through the data of industrial land transactions in Guangdong Province from 2005 to June 2017, this paper obtains the inter-county enterprise transfer volume and the Guangdong dialect and river basin as the core explained variables, the counterpart assistance relationship as the formal institutional factor, and the industrial association and the proximity of counties as the informal institutional factor, supplemented by geographical distance and inter-county land Price differences, labor wage differences, and total investment differences as economic factors. Through the establishment of a negative binomial regression model, it is confirmed that institutional embeddedness has a significant positive effect on enterprise transfer. It is found that the same language, the same local industrial base, Counterpart Assistance, and geographical proximity can improve institutional embeddedness. This shows that institutional embeddedness can not only directly promote a firm’s migration but can also be affected by the specific regional history and culture and the local industrial base. Therefore, this conclusion suggests that it may be an important thinking direction for future industrial policy to fully consider the regional history and culture and the institutional embeddedness of the local industrial base.
4. Results
Table 5 shows the results of the equation (1). The regression results show that the same language, counterpart assistance, common industry foundation, and geographical proximity play a significant positive role in firm migration. This conclusion is consistent with the research concluded that the formal and informal institutional arrangements, such as investment policy [
72,
73], official exchange [
74], administrative approval reform [
29], and social relations embeddedness, promote the entry of local enterprises. Especially, the counterpart assistance shows the most significant effect in firm migration, which highlights that formal institutional arrangements play a crucial role in the transfer of enterprises in Guangdong Province. Besides, the distance between counties plays an obvious negative role, which is consistent with the relevant conclusions of traffic cost factors. However, the impact of the land price difference, total investment difference, and the labor cost difference between counties on enterprise transfer are not obvious. This conclusion is not consistent with the neoclassical theory of enterprise transfer guided by cost-saving, but it is internally consistent with the concept of “location stickiness” in economic sociology. Furthermore, it shows that enterprise transfer in Guangdong Province is mainly affected by regional institutional environment factors and the cost Is not the main factor of enterprise transfer The above results are significant when the ratio of sample variance to mathematical expectation is less than 1, which shows that the model results meet the requirements of negative binomial regression, and further proves the rationality of the regression equation setting.
4.1. Informal Institution Embeddedness Can Promote the Transfer of Regional Enterprises
For the informal institutional factor of language,
β1 was found to be positive, indicating that the same language has a steady role in promoting the transfer of enterprises between districts and counties. Model 1 in
Table 5 reports the results of only considering the influence of dialect on regional enterprise transfer. It can be seen that the influence coefficient of the same language is 0.837. From model 2 to model 3, after considering the formal institutional factors of whether the two districts and counties have a counterpart assistance relationship or industrial association, the influence coefficient of language dropped to 0.5 but was still significant at a 1% confidence level. In model 4, the influence coefficient of language identity is 0.389, which is still significant at a 1% confidence level. In models 5 and 6, the economic cost factors of the distance between districts and counties and the average price difference of industrial land, the total investment difference, and the average wage difference were added, respectively, and the coefficients of the same language are 0.132 and 0.131. respectively, which shows that the same language still plays a positive role in the transfer of regional enterprises, but it is not significant after the distance factor is added. This shows that, on the one hand, the informal system such as the same language is used, and on the other hand, the transfer of enterprises in Guangdong Province has a significant distance blocking mechanism, which conforms to the general characteristics of enterprises moving nearby. In order to further verify the positive impact of the same language on the transfer of enterprises between counties, according to the objective fact that human civilization generally originated in a specific watershed, this paper used the same watershed as an alternative variable of the same language to test the robustness of the model results. The results are shown in
Table 6. The results of models 7–10 are similar to those of models 1 and 4 in
Table 4, indicating that the same watershed has a significant positive effect on regional enterprise transfer. The regression results of the distance between counties, the land price difference between counties, total investment difference between counties, average labor wage difference, and other control variables were added into models 11 and 12, respectively. The results show that the same watershed still has a significant positive effect. The regression coefficient
β 1 is 0.221 and 0.227, respectively, and is significant at the 5% confidence level. The results show that the same drainage basin has a stable effect in promoting the transfer of enterprises across counties. It is further proved that the same language has a steady positive effect on the transfer of enterprises across counties.
In addition, having a common industrial base can also significantly promote the transfer of enterprises between districts and counties. The results of models 3–6 in
Table 5 and models 9–12 in
Table 6 show that the institutional environment with the same industrial base can promote the transfer of enterprises between districts and counties, and the regression coefficient β 3 is stable above 0.2 and is significantly positive at the 5% confidence level.
The above results strongly prove that the informal system of the same language and the same industrial base have a steady positive effect on the transfer of enterprises, which verifies Hypothesis 1, consistent with the theory of institutionalism in economic geography that historical and cultural factors play a key role in the transfer of enterprises and other economic behaviors. This result shows the necessity and rationality of understanding economic behavior from a broader institutional environment, it enriches the theoretical understanding of enterprise migration, and it provides evidence for revealing the institutional factors of enterprise transfer. In fact, in the process of enterprise transfer in Guangdong Province, the same language not only improves the level of communication between economic actors but, more importantly, the same language and the same industrial base mean a common informal institutional environment, which can stimulate the power of enterprise transfer.
4.2. The Embeddedness of Formal Institution Is the Core Power of Enterprise Transfer
Formal Institutional embeddedness of Counterpart Assistance is the core force in promoting the migration of regional enterprises in Guangdong Province. The results of models 2–6 in
Table 5 and models 8–12 in
Table 6 show that the formal institutional embeddedness of Counterpart Assistance and institutional environments with a common industrial base has significant positive effects on the transfer of enterprises between counties. The coefficient
β2 of the counterpart assistance relationship is stable at above 0.5, and the coefficient value is the largest among all independent variables and is significantly positive at the 1% confidence level, indicating that counterpart assistance plays a decisive role in the transfer of enterprises across counties in Guangdong Province.
The above results prove that formal institution embeddedness has an important impact on enterprise transfer. These results verify Hypothesis 2, which is in line with the theoretical core of institutional factors affecting economic behavior in the institutional turn of economic geography, especially in line with the new institutionalism’s emphasis on the informal institutional environment. Of course, it needs to be emphasized that the results of this study highlight the important influence of formal institutional arrangements on promoting the transfer of enterprises and reshaping the regional economic pattern, and further illustrate that the government plays an important role in the process of enterprise transfer, especially the upper-level government co-ordinates the institutional arrangements of the lower-level government, which can provide common goals for governments at all levels and can improve the implementation of policies. This is consistent with Mac Leod’s view that criticizing institutionalism overemphasizes the informal institutional environment and ignores the impact of formal institutional arrangements such as state policy on economic behavior. China is a country with an obvious power hierarchy structure. On the one hand, this hierarchy power structure can set up a common development goal and promote regional coordinated development; on the other hand, an in-depth analysis of formal institutional arrangements is essential to explain economic behaviors such as enterprise migration.
In fact, the migration of enterprises in Guangdong Province is promoted by the government. As early as 2005, the Guangdong provincial government started to establish a counterpart assistance relationship between Pearl River Delta cities and eastern, western, and northern Guangdong cities. Driven by the financial crisis in 2008, the Guangdong provincial government issued the development strategy of “double transfer” and promoted enterprise transfer as an important part of the counterpart assistance relationship. In order to promote the transfer of enterprises in the Pearl River Delta to the eastern, western, and northern regions of Guangdong Province, the Guangdong provincial government planned 34 industrial transfer parks in the eastern, western, and northern regions of Guangdong Province; issued corresponding land preferential policies, tax preferential policies, and talent subsidy policies; established the target assessment mechanism of industrial transfer parks; mobilized the power of governments at all levels; and guided enterprises to transfer to industrial transfer parks. It needs to be emphasized that with the promotion of enterprise transfer, the counterpart assistance relationship has experienced substantial institutional evolution, which is specifically manifested in the deepening of the counterpart assistance relationship at the prefecture and city levels into the counterpart assistance relationship at the county level. The counterpart assistance content has been deepened from the original economic assistance to all-round assistance such as industrial assistance, technical assistance, education assistance, people’s livelihood assistance, and others in the region. Corresponding government officials, scientific and technological personnel, and volunteers are dispatched to the assisted areas to help establish and manage the local economic and social development and improve the local institutional environments. This kind of all-round help relationship directly improves the institutional embeddedness between counterpart help areas, promotes the institutional convergence between the two counties (thus significantly promoting the economic cooperation across the two places), and promotes regional enterprise migration.
4.3. Geographical Proximity Promotes the Transfer of Regional Enterprises
According to the neighborhood school, geographical proximity means that the same institutional environment may exist, which can enhance both the trust between economic actors and the attraction of business transfer. Models 4–6 in
Table 5 and models 10–12 in
Table 6 report the role of geographic factors in enterprise migration. It can be seen that geographical proximity has a significant positive effect on the transfer of enterprises between districts and counties, and the regression coefficient
β4 is significantly positive at a 1% confidence level, stable at more than 0.369, indicating that enterprises tend to move to neighboring counties. This conclusion is also verified in models 5 and 6 and models 11 and 12. The distance between districts and counties shows a very strong negative effect, and its regression coefficient
β5 is stable below –1.726, indicating that the greater the distance between counties, the fewer enterprises will migrate.
The existing literature mainly expounds on the tendency of enterprises to move to neighboring areas from the perspective of industrial agglomeration and relationship embeddedness. It holds that geographical proximity can promote informal communication among enterprises within the cluster, which increases knowledge spillover and promotes technological innovation, so as to enable enterprises to obtain mature labor force, the latest technology, and market opportunities. The neighborhood school gives a more extensive explanation than geographical proximity can provide a wide range of trust foundations. After a long development process, enterprises and individuals establish a good social relationship network and production network in their current location and gradually adapt to the local institutional environment, especially the market environment in which enterprises are painstakingly operating, so creating a strong “embeddedness” and “location stickiness.” Taking Foshan ceramic enterprises as an example, as early as 2005, because of environmental pollution, Foshan issued a compulsory ceramic transfer policy, which forced ceramic enterprises to transfer by lift tax and environmental protection requirements. However, the reality is that most of the ceramic enterprises originally relocated from the center of the city and transferred their production links to the suburban district, then to Zhaoqing and Qingyuan, which neighbor Foshan, meanwhile keeping their sales department in the center. The survey and interview also confirmed the relevant conclusions.
For example, in Zhangcha Street, Chancheng District, Foshan City, there are more than 3700 children’s clothing production enterprises, about 4000 supporting enterprises, and about 500000 employed people. After 2008, more than 3000 enterprises are facing the pressure of rising land prices and production costs. However, most enterprises say that they will not move at present, mainly for the following two reasons: first, the local production chain is relatively complete (raw material purchase, design and development, production and processing, sales and display services become a system), and manufacturers are reluctant to move. Second, the manufacturer does not know where to move, because the production cost of other places is uncontrollable (there are risks such as labor force, land and plant rent, for example, labor force cannot bear hardship, requires more, and requires higher requirements). Generally, it is transferred within the tenon. At present, 80% of enterprises still stay in Chancheng, but 80% of them are foreign bosses. There is no worry about transferring the children’s clothing industry because these bosses have sprouted in this life. (President and Secretary-General of Foshan children’s clothing association)
4.4. The Cost Factors of Enterprise Migration Are Not Obvious
Finally, compared with institutional and geographical factors, model 6 in
Table 5 and model 12 in
Table 6 show that the regression coefficients of a land price difference, total investment difference, and average wage difference between counties are negative, but do not pass the significance test. This conclusion is contrary to the traditional view of low costs attracting enterprise migration. The main reason may be that the traditional low-cost theory overemphasizes the influence of economic factors but does not consider the restriction of the regional institutional environment. In theory, low costs can only be persuasive based on homogeneous areas. Then, according to the industry gradient transfer theory, enterprises will follow the economic gradient from high to low, which shows that it is difficult for regions with a far gradient to directly obtain enterprise transfer by skipping the regions with near gradient, even though they have lower costs than those with near gradient. In fact, the influence of the regional institutional environment on enterprise transfer is more important, especially when close to a mature market or to the location of the parent enterprise, which is almost the most important factor to restrict enterprise transfer because moving within a familiar regional institutional environment can minimize the investment risk.
5. Conclusion and Discussion
This paper took the inter-county enterprise migration in Guangdong Province as an example and used the method of econometric analysis to verify the theoretical hypothesis that formal and informal institution embeddedness can promote inter-county enterprise migration. First, this paper creatively drew upon the idea that the same language can reduce administrative division, improve resource allocation ability, and promote economic growth. From more of a micro-perspective, the results show that the same language can promote the transfer of enterprises between counties, to improve regional resource allocation ability and promote local economic development. In the process of enterprise transfer, the same language means that the two places share the same cultural customs, which can enhance their trust and reduce the transaction cost of enterprise transfer. Second, the research shows that the institutional arrangement of Counterpart Assistance is the main influencing factor on the transfer of enterprises between counties in Guangdong Province, which shows that government forces are still playing an important role in shaping the regional economic pattern. In particular, the correct handling of the target agreement between the governments at the same level and the improvement of the institutional embeddedness of different local backgrounds should be the focus of future enterprise transfer. Therefore, the evolution of Guangdong Province’s all-round counterpart assistance institution provides a useful reference. Third, informal institutional factors such as the basis of common industry and the proximity of districts and counties are also important factors to promote the transfer of enterprises.
This conclusion is in line with the core idea of the production network school that emphasizes the industrial linkage within the region and the theoretical view of the neighborhood school that informal institutions promote trust exchange. It is more consistent with the theory of institutional economic geography that the local institutional environment determines economic behavior. Finally, the results show that the cost gradient difference between the two counties does not necessarily affect firm migration, and the low-cost advantage does not constitute an inevitable condition for backward areas to attract enterprises. On the one hand, the results show that compared with international industrial transfer, the dynamic mechanism of local internal industrial transfer is quite different, and the gradient transfer theory needs to consider the institutional environmental differences under different geographical scales; on the other hand, this research shows that the enterprise transfer in Guangdong Province is mainly influenced by the regional institutional environment of formal and informal institutions. This was compared with the policy practice of the Guangdong provincial governments at all levels to vigorously promote industrial cooperation and co-construction since the implementation of the “double transfer” strategy. The results are also in line with the academic proposition that institutional economic geography emphasizes the local institutional environment on economic behavior. Besides, the research shows that in the process of improving the socialist market economy, the government plays an irreplaceable decisive role in shaping the regional economic development pattern and promoting local economic development. Building an efficient government cooperation mechanism is an important direction to promote the coordinated and sustainable development of the regional economy in the future.
The conclusions of this paper have important theoretical and practical significance. First of all, this paper proves that institutional embeddedness has a significant role in promoting enterprise transfer. It provides experience for a comprehensive and in-depth understanding of the internal relationship between the regional institutional environment and enterprise transfer. Second, the conclusions of this paper provide new insights for the formulation of effective regional industrial transfer policies. The research shows that informal institutional environments, such as the same language and the same industrial foundation, can significantly promote the transfer of regional enterprises, which is an important institutional support to improve the counterpart assistance relationship and promote the transfer of enterprises. Future industrial transfer policy needs to consider the combination of local culture, making it more in line with the regional institutional environment in order to promote the regional culture, policy, economy, relations, and other aspects of embeddedness and to improve the institutional effectiveness of enterprise transfer.
The disadvantage of this paper is that it used dialect and river basin to replace specific historical and cultural factors, which is too much of a macro-generalization. The results only provided a weak understanding of the internal relationship between regional institutional environment and institutional arrangement. As a geographer of institutional economy introspects, it may be more important to explain the relationship between institution and local economic development through its specific institutionalization process. Only in this way can we truly understand the secrets of local economic development and firm migration. This is also the direction that needs to be more focused on in the future.