The research on innovation has been studied on multiple levels. In this context, the term “level” refers to the unit of analysis, which can range from a single individual to groups of individuals, organizations (e.g. firms or communities), industries or geographical regions. The reason why various perspectives have been investigated is that innovation is being created in each of these levels. While the majority of innovation literature has focused on a single level of analysis, “little is known about [how] […] one level of analysis influence[s] […] another level” (Gupta et al., 2007: 885). An explanation for the lack of multilevel research is that previous studies that explored unilevels of analysis have accepted the assumptions of homogeneity and independence of the different levels of analysis (cf. (Felin and Foss, 2005) or (Nahapiet and Ghoshal, 1998)). In their research on “Building Dynamic Capabilities” in the pharmaceutical industry and in discordance with these assumptions, Rothaermel and Hess (2007: 914) have found evidence that “heterogeneity across levels of analysis, but also interdependence with alternate levels of analysis” exists. Furthermore, they “highlight the importance of individual-level factors in explaining firm-level heterogeneity in innovation” (Rothaermel and Hess, 2007: 915). Innovation often derives from people's creativity and talent in developing novel ideas. Only through the accumulation of individuals' knowledge, higher levels of knowledge, such as a firm's knowledge on specific production processes and choices of raw materials, can be formed.
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