A new business ecosystem for SMEs development in China: Key-node industry and industrial net

After 2009, the economic phenomenon of Taobao villages appeared in China, whose economic growth started to decline, but the number of small- and medium-sized enterprises (SMEs) grew at an astonishing rate. Based on a case study of Taobao villages, we found that a new industrial-organizational structure had developed within the traditional e-commerce model. This industrial-organizational structure, which we termed, a key-node industry and industrial net (KIIN) system, is unique in the world. A key-node industry is a platform that integrates logistics, information flow, and capital flow. It reorganizes the traditional industrial-chain structure and is connected with the traditional industrial chains to form a network industrial-organizational model, which can become an industrial net. Through an analysis using the differences-in-differences model, we verify the hypothesis that the KIIN system can improve the efficiency of resource allocation by building a more competitive organizational structure and then improve the production efficiency.