Networks and Innovation: The Role of Social Assets in Explaining Firms' Innovative Capacity (original) (raw)
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2019
Firms are facing great challenges in the intensive, rapidly developing competitive market. Thus, firms have begun searching for new means to innovate in order to grow, compete, or simply survive. Using inter-firm relationships as a source of innovative ideas, firms gain access to valuable information, knowledge and resources that can be embedded for commercial gain. Nonetheless, the potential positive effects of these relationships can become adverse when firms are too deeply embedded in a network. Most research to date focuses almost exclusively on the positive effects of social capital as the most powerful factor in fostering innovation without paying due attention to the negative effects. There is an urgent need to develop a more comprehensive and precise understanding of the dark side of social capital. Therefore, the aim of this thesis is to investigate the negative effects of social capital on innovative performance in the context of cluster networks. With consideration of the socio-territorial context of clusters, the four dimensional social capital model (focusing on structural, relational, cognitive and proximity-related dimensions) will be used to offer an insight into the nature of such relationships and open the 'black box' of the dark side of social capital. Furthermore, this study also investigates the interrelationship between the four dimensions of social capital, and the extent to which proximity defines social capital. The study was validated by the interviews of 23 firm owners from various industries that operate within cluster networks, and of two representatives of relevant institutions in Thailand. The outcomes of the study reveal that over-embeddedness in a cluster network can constrain a firm's effective decision-making capacity and restrict its access to new information and knowledge. The cost of maintaining intra-cluster relationships is greater than the benefit, thus impeding the innovative performance of firms in a cluster. In contrast to the dominant view put forward in the literature surrounding social capital, the results of the study confirm an inverted u-shaped relationship between social capital and innovative performance. The results of this study contribute to the ongoing debate surrounding the relationship between social capital and innovation, as well as exploring the as-yet under-investigated field of social capital. From a managerial perspective, though, the results of the study present the negative effects of social capital, the intention is to advocate for a shift from the blinkered 'more-is-better' approach towards a 'too-much-can-hurt' mentality. The results of the study offer practical value by providing guidance for practitioners and cluster policymakers on managing the negative effects of over-embeddedness in cluster networks. iii DEDICATION This thesis is dedicated to the memory of my mother. This thesis is as much yours as it is mine. v DECLARATIONS I, Theenida Buntornwon, declare that no portion of the work referred to in this thesis, entitled 'An Investigation of the Negatives Effects of Social Capital on Innovative Performance of Firms in the Cluster Network' has been summited in support of an application for another degree, or qualification to any other university, or institute of learning. This thesis conforms to British Standard BS 4821: 1990, the 'British Standard Recommendations for the Presentation of Thesis and Dissertations' and follows the Harvard referencing system. Some of the material displayed herein has already been presented in the following conferences papers: Buntornwon, T. and Scandelius, C. (2016) 'An investigation of the negatives effects of social capital on clustering in the context of small and medium sized enterprises',
Social Networks: Effects of Social Capital on Firm Innovation
Journal of Small Business Management, 2010
This paper aims to introduce some specific insights regarding social networks and the geographical proximity of firms in order to investigate factors involved in the innovation of firms. In particular, this study reviews ideas from the industrial district literature by analyzing the role played by the dimensions of social capital, that is, social interactions, trust, shared vision and involvement of local institutions, in the process and product innovation of firms inside the district. This paper draws on an analysis comparing district members and nonmembers based on a sample of 220 manufacturing firms in the Valencia Region (Spain). Findings suggest a positive association between district affiliation, social capital and involvement of local institutions and innovation that can offer relevant prescriptions for policy makers and individual entrepreneurs.
Complementary effects of clusters and networks on firm innovation: A conceptual model
We develop a conceptual model that explains how a firm’s cluster and network complement each other in enhancing the firm’s likelihood of technological innovations. We identify critical innovation catalysts-awareness and motivation—and innovation barriers—resource constraints, organizational rigidity, and uncer- tainty. Our conceptual model explains how various factors in the cluster such as competitive intensity, social interaction intensity, and cluster vitality and network factors such as resource potential, acquisition orientation, co-development orientation, and network vitality impact innovation catalysts and barriers and subsequently the firm’s likelihood of generating incremental and breakthrough innovations. We discuss several promising avenues for future research.
Friends or Neighbors? The Effects of Inter-Firm Network and Cluster on Technological Innovation
papers.ssrn.com
, the focus is largely on cluster, and both papers looked at the effects of network centrality only. Owen-Smith and Powell"s research (2004) suggests that cluster imperfectly directs information transfer, whereas network of ties serve as closed circuits. Thus, while the need for examining the role of both cluster and network has been acknowledged and some recent attempts have been made, it is unclear how and when firms" likelihood of generating innovations is influenced by network and cluster factors simultaneously. With a focus on technological innovation, we aim to advance the literature by addressing the following research questions: (a)
Influence of Firms’ Network Position on their Innovation Outcome in a Mature Industrial Cluster
Academy of Management Proceedings, 2019
Our study employs a social network perspective to investigate the influence of firms' structural and relational embeddedness on their innovation outcome in a directed network in a mature industrial cluster. From the structural embeddedness perspective, we argue that a central position in an informal advice network does not bring equal innovation benefits to advice-seekers and advice-givers. Notably, in a mature cluster, we expect that the number of advice giving ties (popularity) positively influences the innovation outcome of firms, whereas the number of advice-seeking ties {activity) negatively affects the firms' innovation. We also expect that access to structural holes has a negative and significant impact on innovation outcome in a mature industrial cluster. From the relational embeddedness perspective, we investigate the effect of strong and weak ties on the innovation outcome of firms in a mature industrial cluster. We expect a positive relationship between firms' innovation output and strong ties, and a negative relationship between weak ties and the innovation output of firms. Our findings suggest that activity has a significant negative impact on the innovation outcome of firms, while popularity shows a significant positive impact on the innovative outcome of firms. Strong ties show a positive and significant impact on innovation, while weak ties demonstrate a significant negative effect on innovation. We also test the mediating effect of absorptive capacity on the relationship between advice ties and innovation. We find that absorptive capacity fully mediates the relationship between advice-giving and advice-seeking ties, and innovation.
Innovation, knowledge and relations – on the role of clusters for firms’ innovativeness
European Planning Studies, 2018
For more than two decades, theories on regional clusters have inspired economic and structural policies at the European, national and regional levels. Based on the assumption that clusters generate innovation, policy-makers at all levels of governance have adopted instruments and mechanisms to stimulate, resource and sustain clusters. Despite the considerable attention paid to the clustering phenomenon, empirical evidence on to what extent firms' innovation activities benefit from operating in clusters is scarce and inconclusive. This paper contributes to the micro-foundation of clustering effects by examining the characteristics and activities of cluster firms in relation to their innovativeness. Bridging innovation, management and cluster theories, it is argued that structural and relational embeddedness, relational capital and absorptive capacity influence clustered firms' innovativeness. Partial least-squares structural equation modelling of data from 104 firms in two software and information technology service sector clusters reveals that firms' structural embeddedness (i.e. frequency of interactions) in clusters and external networks facilitates innovation cooperation. Firms' absorptive capacity reinforces this positive effect of cluster-internal interactions on innovation cooperation. Results also suggest a substitution effect of trust as relational control mechanisms for formal control mechanisms within the cluster. However, the study finds no significant impact of firms' innovation cooperation within the cluster (i.e. relational embeddedness) on their innovation success.
2009
Social networks matter in the innovation processes of young and small firms, since 'innovation does not exist in a vacuum (Van De Ven, 1986: 601).' The contacts a firm has could both generate advantages for further innovation and growth, and disadvantages leading to inertia and stagnation. In the first case the existing social network or the new business contact provides opportunities furthering eventual success, in the second case, the existing network or the new business contacts turns out to have a constraining or even detrimental effect on performance.
2004
We apply social network analysis methods to describe the evolution of the innovator network of Jena, Germany in the period from 1995 to 2001. We find this evolution to be directed towards an increasing focus on core competencies of the local innovation system. Further we analyze the network resulting from R&D cooperations and explain by means of network regression techniques that the job mobility of scientists and the technological overlap between the actors, rather than past cooperations, can best predict the resulting structure. We also observe an increasing importance of the university while the former “Kombinate” begin to lose their prominent role.