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Networks and Innovation: The Role of Social Assets in Explaining Firms' Innovative Capacity

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  • Uwe Cantner
  • Elisa Conti
  • Andreas Meder

Abstract

The claim of a positive association between a firm's social assets and its innovative capacity is a widely debated topic in the literature. Although controversial, such an argument has informed recent innovation policy across Germany, increasingly directed to the cluster formation. In the light of the growing attention and financial efforts that cluster-based innovation policies are receiving, it is worth answering two main questions. First, are firms with a relatively high level of social capital likely to be more innovative? Secondly, do companies pursuing innovation in partnership innovate more? This paper empirically answers these questions by exploring a cross-sectoral sample of 248 firms based in the Jena region. On the one hand, the extent to which a firm is integrated in its community life does not contribute to an explanation of its innovative performance. On the other hand, directed cooperation with the specific goal of innovating shows a positive impact on innovative performance. However, the correlation between the extent of the network of co-innovators and firms' innovative capacity presents an inverted U-shaped relation: there is a threshold in the number of co-innovators justified by the costs of innovating by interacting. A policy lesson can be drawn from these findings: cluster-based policies are to be treated with caution as firms face costs of networking and not merely benefits.

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  • Uwe Cantner & Elisa Conti & Andreas Meder, 2009. "Networks and Innovation: The Role of Social Assets in Explaining Firms' Innovative Capacity," European Planning Studies, Taylor & Francis Journals, vol. 18(12), pages 1937-1956, November.
    • Handle: RePEc:taf:eurpls:v:18:y:2009:i:12:p:1937-1956
    DOI: 10.1080/09654313.2010.515795
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    1. Holger Graf, 2006. "Networks in the Innovation Process," Books, Edward Elgar Publishing, number 4249.
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    Cited by:

    1. Pippel, Gunnar, 2012. "The Impact of R&D Collaboration Networks on the Performance of Firms and Regions: A Meta-Analysis of the Evidence," IWH Discussion Papers 14/2012, Halle Institute for Economic Research (IWH).
    2. José María García Álvarez-Coque & Francisco Mas-Verdú & Norat Roig-Tierno, 2017. "Technological innovation versus non-technological innovation: different conditions in different regional contexts?," Quality & Quantity: International Journal of Methodology, Springer, vol. 51(5), pages 1955-1967, September.
    3. Uwe Cantner & Holger Graf, 2010. "Growth, Development and Structural Change of Innovator Networks: The Case of Jena," Chapters, in: Ron Boschma & Ron Martin (ed.), The Handbook of Evolutionary Economic Geography, chapter 17, Edward Elgar Publishing.
    4. Naqeeb Ur Rehman, 2016. "Network alliances and firms’ performance: a panel data analysis of Pakistani SMEs," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 6(1), pages 37-52, April.
    5. Cristina Bettinelli & Mara Bergamaschi & Rasmi Kokash & Silvia Biffignandi, 2016. "Process Innovation, Alliances, and the Interplay of Firm Age: Early Evidence from Italian Small Firms," International Business Research, Canadian Center of Science and Education, vol. 9(5), pages 86-99, May.
    6. Rehman, Naqeeb Ur, 2015. "Does Internal and External R&D Affect SMEs Innovation Performance? Micro Level Evidence from India and Pakistan," EconStor Preprints 113229, ZBW - Leibniz Information Centre for Economics.
    7. Riccardo Leoncini & Giulia Vecchiato & Luca Zamparini, 2020. "Triggering cooperation among firms: an empirical assessment of the Italian Network Contract Law," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 37(2), pages 357-380, July.
    8. Papastamatelou Julie & Busch Rainer & Ötken Begüm & Okan Elif Y. & Gassemi Karim, 2016. "Effects of Network Capabilities on Firm Performance across Cultures," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 49(1), pages 79-105, March.
    9. Lyndon Murphy & Robert Huggins & Piers Thompson, 2016. "Social capital and innovation: A comparative analysis of regional policies," Environment and Planning C, , vol. 34(6), pages 1025-1057, September.
    10. Robert Huggins & Andrew Johnston & Piers Thompson, 2012. "Network Capital, Social Capital and Knowledge Flow: How the Nature of Inter-organizational Networks Impacts on Innovation," Industry and Innovation, Taylor & Francis Journals, vol. 19(3), pages 203-232, April.
    11. Uwe Cantner, 2012. "Innovationes Jenenses: Some Insights into the Making of a Hidden Star," Chapters, in: Guido Buenstorf (ed.), Evolution, Organization and Economic Behavior, chapter 11, Edward Elgar Publishing.
    12. Rehman, Naqeeb Ur, 2016. "Innovation Performance of Chilean SMEs: A Bivariate Probit Analysis," MPRA Paper 68827, University Library of Munich, Germany.
    13. Mohd Nizam Ab Rahman & Mahmood Doroodian & Yusniza Kamarulzaman & Norhamidi Muhamad, 2015. "Designing and Validating a Model for Measuring Sustainability of Overall Innovation Capability of Small and Medium-Sized Enterprises," Sustainability, MDPI, vol. 7(1), pages 1-26, January.
    14. Uwe Cantner & Holger Graf, 2011. "Innovation Networks: Formation, Performance and Dynamics," Chapters, in: Cristiano Antonelli (ed.), Handbook on the Economic Complexity of Technological Change, chapter 15, Edward Elgar Publishing.
    15. Guido Buenstorf (ed.), 2012. "Evolution, Organization and Economic Behavior," Books, Edward Elgar Publishing, number 14183.
    16. Hervas Oliver,Jose Luis & Gonzalez,Gregorio & Caja,Pedro, 2014. "Clusters and industrial districts: where is the literature going? Identifying emerging sub-fields of research," INGENIO (CSIC-UPV) Working Paper Series 201409, INGENIO (CSIC-UPV).
    17. Robert Huggins & Piers Thompson, 2015. "Entrepreneurship, innovation and regional growth: a network theory," Small Business Economics, Springer, vol. 45(1), pages 103-128, June.
    18. Rehman, Naqeeb Ur, 2016. "Does Internal and External Research and Development Affect Innovation of Small and Medium-Sized Enterprises? Evidence from India and Pakistan," ADBI Working Papers 577, Asian Development Bank Institute.

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    More about this item

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • R5 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis

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