On industrial knowledge bases, commercial opportunities and global innovation network linkages

Highlights

• Examines how knowledge development and use by firms influence their global innovation networks.

• Uses novel measures of international collaboration to proxy innovation network linkages.

• Develops method using CIS data to reflect knowledge bases of firms irrespective of their R&D efforts.

• Finds that ‘synthetic’ knowledge and cumulativeness reduce the likelihood that firms develop truly global networks.

• This holds irrespective of industry classes, R&D intensity and firm size.

Abstract

It is commonly argued that we are witnessing a shift from global production networks, driven by the search for markets and lower cost production sites, to global innovation networks (GINs), driven by the search for knowledge. This paper explores how sources of behavioural differentiation derived from the literature on industrial knowledge bases and technological regimes condition the degree of involvement in international innovation collaboration. We find this to be significantly influenced by the nature of knowledge and the cumulativeness of knowledge development, the active use of measures to protect intellectual property, the inherent need to innovate and the opportunity to generate sales from this activity. The likelihood that the firm establishes and maintains a truly global network configuration is influenced accordingly.

Introduction

Two characteristics define the essence of the current industrial landscape. On the one hand, vast amounts of technology is ‘embodied’ in components, machinery and final products, and exchanged between economies through global commodity trade and production networks (Hauknes and Knell, 2009). On the other hand, processes of inter-organizational knowledge exchanges which are localized due to path dependency and distance decay effects are growing in importance for the competitiveness of firms and for the development of regions. Thus the locus of innovation is shifting away from individual firms towards territorial economies and the distributed networks by which they are linked.

International collaborative linkages are arguably of particular importance in this context, because they have the capacity to transfer disembodied knowledge over long distances (Torre, 2008, Torre and Rallett, 2005). These linkages are at the same time organizationally demanding and prone to inertia and lock-in due to the high marginal costs involved in changing network configurations (Narula, 2002). The geographical scale at which a firm collaborates is therefore determined by how firm-level characteristics and strategies evolve with various external, and often contradictory, centrifugal and centripetal forces (Benito et al., 2002). Strong centrifugal forces are created when rapidly evolving and geographically distributed technological development combines with market differentiation and translates into a need for direct linkages to business contexts abroad (Asheim et al., 2012, Kuemmerle et al., 1999). Centripetal forces arise from the complexity of the technology involved, uncertainties involved in development work and ‘stickiness’ of the underlying knowledge base. The outcome is a landscape of global innovation which is at least as differentiated as the landscape of industry itself.

The objective of this paper is to capture sources of differentiation beyond those attributable to discrete management choice or aggregate industry characteristics. It links theories of technological regimes (Breschi and Malerba, 1997, Castellacci, 2008) to recent advances in the study of industrial knowledge development and innovation (Asheim and Coenen, 2005, Asheim et al., 2012, Jensen et al., 2007). It then discusses why the four main sources of behavioural differentiation identified by this literature should be considered to be especially distinct mediators of involvement with international partners. Hypotheses are developed and investigated using representative sample micro-data from the Fourth Norwegian Community Innovation Survey.