Chapter 3: Why Business Relations and Networks Exist II: Value Creation and Innovation
INTRODUCTION The previous chapter described how relations and networks arise in business because of economies of specialisation; how they are the means by which the fruits of the division of labour in a society are realised. This focused on the role they play in accessing, combining, recombining and coordinating the activities, resources and outputs of people and ﬁrms specialising in diﬀerent parts of the overall process of value creation and delivery. In this chapter I describe the second basic role of business relations and networks in society: to shape the way an economic system develops and evolves through their impact on innovation, learning and knowledge development. While Chapter 2 focused on the role of business relations and networks in delivering a standard of living to a society given existing production logic, this chapter is about the way the standard of living delivered and the associated production logic change and evolve. Business relations and networks play important roles in the development and evolution of the value-creating process. First, they contribute to the generation of new ideas, to learning, knowledge development and innovation. They are the means by which knowledge and ideas move around in business systems; the way ideas confront each other, are adapted, integrated, combined and recombined in new ways. Both functional and dysfunctional consequences can result, as we shall see. Second, they are the means by which new ideas are taken up and used. They are the means by which the knowledge, skills and resources required to develop,...
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