Prof. David JacobsonDCU Ireland and FIT CyprusandKevin HeanueRural Economy Research CentreIreland

Embeddedness and Innovation in Low and

Medium Tech

Question

What are the patterns of “embeddedness”, and their change over time, displayed by innovative LMT firms?

Theoretical Framework

Location and Innovation (e.g. Industrial Districts, Regional Systems of Innovation) But

Evolution of industrial districts; struggle for “sticky places in slippery space” (Markusen, 1996)

Inverted U of embeddedness and innovation? (Uzzi, 1997; Boschma et al, 2002; Boschma, 2005)

Innovation: Uzzi, Neoclassical, Embeddedness

Uzzi (1997), Boschma et al (2002): inverted U

Neoclassical: Social embeddedness detracts from innovation

Embeddedness: Enhances innovation Source: Boschma (2005)

Dimensions of Innovative Processes

Network relationships

Interactive learning

Knowledge bases

Embeddedness

Inter-firm rather than individual/social

Connections:

With customers and suppliers, other firms, agencies, institutions

Are they local or distant; market or non-market; “shallow” or “stretched”?

Empirical Context

EU FP5 Project on PILOT

All firms innovative, successful, over 50 employees (44 firms studied)

Two sectors in Ireland:

Fabricated Metal Products (NACE 28) and Furniture (NACE 361)

The Four Irish Firms

FURN1 Monaghan, wooden furniture mainly for export

FURN2 Meath, upholstered furniture mainly for local market

FAB1 Mayo, volume producer of high-spec components, mainly for MNCs in Ireland, in telecoms, automotive, medical equipment etc.

FAB2 Cork, stainless steel vessels and turnkey system preparation for process industries, mainly dairy and pharma in Ireland

Results: FURN1

Local or Distant

Market or Non-Market

Network Relations

Distant: International suppliers

Market & Non-Market (Trust-based rels.)

Interactive Learning

Local & Distant (customers)

“Temporary Clusters”

Knowledge Bases

Local & Distant (E. Eur.)

State agencies & E.E. partner

Results: FURN2

Local or Distant

Market or Non-Market

Network Relations

Local spec. labour. International Adapt project.

Market & Non-Market (Trust-based rels.)

Interactive Learning

Local & Distant, agencies & S & C

S & C and Market

Knowledge Bases

Internal, tacit, experience-based

Market

Results: FAB1

Local or Distant

Market or Non-Market

Network Relations

Formal local networks

Market based rels. with Cs

Interactive Learning

Mostly internal, but also S and C

S & C and Market

Knowledge Bases

Local cluster, FAB1 moving up in VA

Deep institut. base

Results: FAB2

Local or Distant

Market or Non-Market

Network Relations

Local Cs (MNCs) and sub-contrs.

Market based rels. with Cs

Interactive Learning

Mostly internal, formal R&D

Agency funded, links with univs.

Knowledge Bases

Tacit and formal, local. Also USA

Internal mostly, formal

Conclusion

FURN1 & 2 support inverted U, but

differently

FAB1 & 2 do not, at least not yet

If FAB2 succeeds in accessing foreign

markets it will “stretch” its

embeddedness

Inverted U: Embeddedness and Innovation

Embeddedness

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