New Horizons in Regional Science series
Edited by Charlie Karlsson, Börje Johansson and Roger R. Stough
1 Kingsley E. Haynes and Hiroyuki Shibusawa INTRODUCTION 8.1 In production activities, knowledge networks represent a response to quite specific circumstances. The complementary role of knowledge is an essential factor for successful innovation. Network agreements may be formed in response to a specific aspect of proprietary tacit knowledge (Fisher, 2001). The exchange of such knowledge can take place only through close personalized contacts, and more general but localized, relationships (OECD, 1992). Such exchanges as represented by inter-firm agreements and their networks are easier to observe than the extensive exchanges that relate to internal intra-firm development or through mergers and acquisitions. Firms, especially smaller firms that lack extensive internal development, have to enhance their absorptive capacity by using other means (that is learning-by-interacting), such as interacting with other firms, taking advantage of knowledge spillovers from other firms, and learning from customers and suppliers (Lundvall, 1988). Despite an obvious lack of formal R&D activities, small firms are the engine of innovative activities due to the rapidity with which they transform developments to products and introduce new products to the market. However, such transformation uses spillovers supported by various kinds of community interaction. This process of organizational learning takes place within an expanding community of interaction which crosses intraand inter-organizational levels and boundaries. The field of Communities of Practice (CoPs) offers a new direction in the study of organizational learning (Wenger, 1998). CoPs are groups that are formed from agents who share a concern, a set of problems, or a passion about...
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