Report

Are Innovation Networks becoming global?

Since the seminal work of Chris Freeman in the late 1980s and early 1990s, evolutionary economists and other social scientists have been observing the importance of collaborative forms of interactions when firms conduct innovation. These innovation networks across firms have traditionally been deeply embedded locally, forming localized economies with significant knowledge spill-overs. Perhaps one of the most well-known examples of these localized innovation networks forming a highly-innovative and localized economy is the case of Silicon Valley.

However, with the rise of the BRICS (Brazil, Russia, India, China and South Africa) as influential emerging economies during the past decade, the question whether innovation networks are becoming globalized is not trivial. This is so for two important reasons. Firstly, because implicit in much of the early and current academic literature assumes that innovation networks are essentially localized and territorially-bounded. However, this assumption might prove to be inaccurate, given the apparent interest of firms to create collaborative links in areas of advanced knowledge and innovation with firms located elsewhere, and increasingly so with firms located in BRICS countries. In other words, the internationalization and globalization of innovation networks would perhaps come to prove that parts of our theories regarding localization are incomplete. AnnaLee Saxenian, the expert in Silicon Valley, expressed this very clearly in her book “ The New Argonauts”. She convincingly argues that the strength of Silicon Valley is based on the Indian and Chinese-born “Argonauts” who interact across international borders, and have made Silicon Valley a strong hub for innovation networks in information and communication technologies around the globe.

Secondly, the question whether innovation networks are becoming global is not a trivial question because some of the notions upon which national innovation policies are based might need to be reconsidered. Naturally, national tax payer money and national policy instruments must benefit the nation nal economy. However, as the national economy is becoming more interdependent with other national economies, the boundaries of what is ‘national’ and ‘national interest’ is becoming less clear from the perspective of public action. For example, the Danish government has very active innovation centres in Shanghai and Hong Kong, serving the interests of Danish firms willing to establish innovation-related projects with Chinese firms. This helps Danish firms tapping into knowledge resources complementary to those in Denmark for purpose of developing specific forms of innovation (new products, new services) specifically designed for the Chinese market, for the Asian market, or just directly, for the global market.

In the recently finalized research project INGINEUS, a group of researchers (were Copenhagen Business School was included), found that the globalization of these innovation networks is still an emerging trend. In the INGINEUS survey more than 1.200 companies were asked about their global dimension, their innovative dimension, and their ‘networkedness’ dimension. In other words, how global/regional/national they are, how innovative they are, and how networked they are. Around 50% of the respondents indicated the co-existence of medium to high levels of ‘globalness’, innovativeness and ‘networkedness’. In other words, half of the sample is to a medium or low degree engaged in global innovation networks in the weakest definition of those global networks. However, when examining the strongest possible forms of globalness, innovativeness and networkedness, less than 2% of the firms were truly participating into global innovation networks.

These findings give a realistic picture about this phenomenon. They tend to show that much of the issues regarding global innovation might be overestimated at the moment, particularly those involving firms based in the BRICS. Having said that, however, the findings also show that the overall number of firms combining medium-levels of these variables is quite high in our sample, meaning that there might be a trend coming up. This is also what anecdotic evidence in popular media is telling us regarding individual firm cases. Furthermore, it is worth remembering that the Chinese, Indian, Brazilian and South African governments are investing heavily in R&D and in innovation activities these days. All of this is to say that, claims stating we are moving towards a new geography of innovation dominated by the BRICS seem to be overestimated, at least at this moment. A more realistic picture is that the emergence of global innovation networks is a gradual and incipient phenomenon. In other words, the networking Argonauts of Silicon Valley are still the exception rather than the rule.

You can read the full INGINEUS policy brief here:

http://www.ingineus.eu/UserFiles/attach/201237933534INGINEUS_4PB.pdf

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3 thoughts on “Are Innovation Networks becoming global?

  1. Interesting! I was interested in knowing whether you have measured the impact of their level of global orientation and connectivity on their performance (In financial and R&D terms (patents, new products etc.)

    • Yes, we did. We measured the firms’ degree of networkedness (through formal collaborations), degree of globalness (the geographical scope of different activities of the firm), and degree of innovativeness (following CIS-survey approach on firms’ innovative performance). We are planning to publish a special issue before the end of 2012 on “Research Policy”, the acknowledged academic journal, on the topic of global innovation networks.

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