Divergent Impacts of Global and Local Cooperation on Innovation : Key Insights

from Spain

EURAM Conference5th June 2014

Henar AlcaldeM.D. Parrilli

Index

1. Introduction2. Research question3. Hypotheses4. Sample5. Results6. Conclusion

Introduction

• The literature on innovation management has been largely concerned about external knowledge flows and innovation outcomes (Kline and Rosenberg, 1986; Teece and Pisano, 1997; Teece, 2007).

• In the current era of globalization, firms are involved in a Schumpeterian competition:

– rapidly evolving industries– where competitive capabilities are transitory– opportunities are quickly closed by competitors

Introduction

• Firms must obtain relevant knowledge flows in order to develop new and effective innovations with continuity.

• Complementarily, firms must balance their capacity to develop know-how with the ability to introduce new products in the market.

– This evidence suggests the importance of exploring how collaboration practices mediate in such a process.

Introduction

• Understanding the impact of collaboration practices remains an important and under-researched topic – what aspects of OI activities make this concept effective

according to the selection of partners– what type of networks favor innovation

• In this paper we want to contribute to this debate by providing evidence of the types of agents that most effectively help firms to develop different types of innovation.

Research Question

• We add new insights in three relevant areas of business innovation studies. Our main contributions arise from:

1. Impact on a complete set of innovation outputs (i.e. product, process, organization and commercial) of both scientific and market types of collaboration (within and outside the supply chain).

2. Specific attention to the geographical dimension (regional vs extra -regional) of the different partnerships

3. Panel data from the Basque Country (Spain) from 2005 to 2011. This enables us to move beyond previous studies on cross-sectional data, considering the economic recession.

Hypotheses 1: Scientific collaboration

• The scientific-type of interaction does not usually focus on commercial exploitation, but on exploring new technological opportunities.

• Scientific knowledge resources should be unique, relevant and based on new basic knowledge.

• The access to this type of sources entails high expenditures related to transaction costs, opportunity costs, and management time costs.

Hypotheses 1: Scientific collaboration

• Scientific collaboration at REGIONAL LEVEL is likely to entail well-known scientific resources and homogeneous educational patterns.

• This situation is likely to limit the novelty of the knowledge-based interaction.– Homogeneity of the codified and scientific

knowledge bases. – Constrains the firm ability to develop

technological innovations. – Firms are more likely to exploit traditional

knowledge resources by improving internal organizational management.

Hypotheses 1: Scientific collaboration

• Scientific collaboration at INTER-REGIONAL LEVEL might be associated with diverse scientific sources

• Provide heterogeneous sources of advanced codified knowledge– More likely to promote technological

innovation. – Codified nature of scientific knowledge is not

context-specific and does not require personal interaction and face-to-face contact.

Hypotheses 1: Scientific collaboration

• H1a: “Distance in scientific collaboration induces technological innovation”.

• H1b: “Proximity in scientific collaboration does not induce technological innovation, but it might support non-technological types of innovation”.

Hypotheses 2: Market-based collaboration (within SC)

• Partners face common practical problems and experiences

• Directly related to problem-solving

• Exploit their current knowledge pool and new incremental process and product solutions

• Specific contextual knowledge and know-how

Hypotheses 2: Market-based collaboration (within SC)

• Market collaboration within the SC at REGIONAL LEVEL might be associated to homogeneous ‘tacit’ knowledge that:– Would lead to competence traps, lack of

novel sources and over-specialization lock-ins.

– Myopia by restricting their innovation output to current technological combinations

– Importance of tacit knowledge flows (e.g. learning-by-doing and learning-by-using)

Hypotheses 2: Market-based collaboration (within SC)

• Market collaboration within the SC at INTER-REGIONAL LEVEL might be associated to dissimilar knowledge – May maximize the returns on specialization

and complementary spillovers in different markets

– Capture knowledge and information spillovers from different markets

– Overcome intrinsic lock-in risks – Generate a significant effect on

technological innovations.

Hypotheses 2: Market-based collaboration (within SC)

• H2a: “Distance in supply-chain collaboration mainly induces technological innovation”

• H2b: “Proximity in supply-chain collaboration does not induce technological innovation, but it might induce non-technological innovation”

Hypotheses 3: Market-based collaboration (outside SC)

• Market collaboration with competitors focus on carrying out basic research and establish standards

• Knowledge spillovers are more an unintended consequence of the relationship

• Fear of helping rivals and the lack of trust are the main barriers

• Common values and problem sharing is not enough to encourage the exchange of specific knowledge and information inputs.

Hypotheses 3: Market-based collaboration (outside SC)

• Market collaboration with competitors at REGIONAL LEVEL might be associated to

– Generate trust among competitors, to identify common goals

– Informal interactions based on face-to-face contacts

– Implies repeated interactions around the current knowledge patterns

– May lead to overspecialization

Hypotheses 3: Market-based collaboration (outside SC)

• Market collaboration with competitors at INTER-REGIONAL LEVEL might be associated to– Fail in generating trustful relationships– Need to invest in informal interactions

based on face-to-face contacts – Hinder the transfer of tacit knowledge with

the subsequent negative impact on innovation.

Hypotheses 3: Market-based collaboration (outside SC)

• H3a: “Proximity in collaboration with competitors induces non-technological innovation”

• H3b: “Distance in collaboration with competitors does not induce technological innovation”

Sample

– The source of the empirical analysis is the Innovation Survey (CIS).

– Firm-level panel of data compiled by Eustat (Basque Institute of Statistics)

– Period from 2005 to 2011– The panel contains 1431firms during the

7-year period

Results

Conclusion

– Global partnerships, both scientific and supply chain-based, are likely to be the most relevant drivers of disruptive innovation (technological innovation)

– Local and regional collaborations are more likely to generate a higher impact on incremental/non-technological innovation.

– The higher local/regional impact on incremental process and organizational and commercial innovation rely more on tacit knowledge flows that benefit from learning-by-doing and learning-by-interacting.