This chapter provides an overview of how the globalization of value chains affects a firm’s innovation capabilities. It is highlighted that global value chains can stimulate innovation in a number of ways. They can help firms reduce production costs through offshoring, which allows them to free up resources that in turn can be invested in research and development. Furthermore, global value chains permit firms to tap into foreign pockets of knowledge, which lets them strengthen their knowledge base and innovation capabilities. The chapter warns, however, that one should be careful of drawing links between global value chains and innovation in an overly positive way. Firms face important challenges and costs when setting up global value chains, and if not managed correctly these “hidden costs” may overturn the positive link between global value chains and innovation. A particularly important hidden cost is the fallacy of fixed technology. Often ignored by firms, technology is not necessarily fixed, and changes in the organizational structure can thus push firms toward inferior technological paths. In some circumstances, offshoring can thus negatively affect a firm’s innovation performance. These nuances point out that more research is needed on the dynamic relationships between technology and global value chain governance.
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Ari Van Assche
Compared to knowledge generation between producers and suppliers/buyers, horizontal learning is based on non-traded relations, organized through different mechanisms. This chapter explains how knowledge sharing among competitors can be a rational choice for firms in specific settings. To demystify horizontal learning, four processes of knowledge exchange among competing agents and organizations are discussed, namely socially embedded learning, labor mobility, interaction and monitoring, and collective invention. It is suggested that horizontal learning can be a common practice within many knowledge communities, especially in the early stages of innovation processes when dominant designs and technologies are unclear.
Industrial clusters are known globally for the power of their local connections. Yet, external openness and connections to global knowledge and innovation networks are also relevant for industrial clusters to avoid phenomena of entropic death and negative lock-in and to allow local competencies to be nurtured by knowledge flows from non-local sources. This chapter aims to provide an overview on three strands of scholarly research that have contributed to understanding different dimensions of a cluster’s openness to global networks and its impacts on innovation. The chapter discusses international development studies on global value chains, international business (and connected international and development economics) research on technological spillovers of multinational enterprises and, finally, geography of innovation perspectives and work in economic geography on technological gatekeepers in industrial clusters. The chapter concludes by integrating these three strands of literature and proposing an agenda for future research.
Deborah Leslie and Norma M. Rantisi
Cultural industries have seen tremendous growth in recent years as a source of revenue and employment. This growth has sparked an interest among policymakers and researchers about what constitutes cultural industries, and the socio-spatial dynamics that underpin the innovation process within such industries. In this chapter, we follow Allen J. Scott in defining cultural industries as activities that produce goods and services valued for their symbolic and aesthetic qualities relative to their utilitarian ones, and we examine the nature of innovation within these industries, given the significance of aesthetic content as a distinguishing feature. In particular, we focus on the need for symbolic knowledge – that is, the knowledge of contemporary cultural currents – as a unique element of the innovation process, and we explore the bases and challenges for the production of such knowledge. In exploring the production of symbolic knowledge, we review some of the established literature that cites the innovation process as an inherently collective one, but we also identify elements that have been, to date, under-examined in the literature in order to broaden out current analyses of the social foundations of innovation. At the same time, our chapter considers some of the key challenges that firms and workers in these industries face, particularly in light of recent structural and technological changes, and the delicate balance between aesthetic and commercial considerations that must be attained. We highlight initiatives that can help to foster more conducive settings for innovation, with particularly emphasis on forms of support and spaces that can shelter cultural workers from risk, mediating rising commercial and technological pressures and fostering experimentation and exchange.
Edward J. Malecki and Ben Spigel
We follow Schumpeter in attributing to entrepreneurs the spark to bring new combinations to market by combining knowledge, perceived opportunity, and other resources to form new firms. A link between innovation and entrepreneurship was first seen in new firms exploiting new technologies in high-technology regions. This context set the tone for research, which we explore in this chapter. We identify four topics: entrepreneurship in high-tech contexts, spinoffs from university research, the local/regional ecosystem or innovation system, and flows of knowledge within social and professional networks. Underlying these four attributes of high-tech innovation are cultural outlooks and orientations. Without an understanding of how culture influences entrepreneurial and innovative activities, it is difficult to study their relationship with the cultural contexts in which they take place. Building on a nexus-based view of innovation and entrepreneurship, we argue that culture is best understood as a process through which actors interpret the world around them and which can either encourage or discourage entrepreneurial and innovative activity.
Harald Bathelt, Patrick Cohendet, Sebastian Henn and Laurent Simon
This chapter provides an overview of major challenges and open questions in the field of innovation research. Eight areas of enquiry are identified that each correspond with one of the parts of the edited volume. The chapter begins by discussing the notion of innovation as a concept and then highlights the interrelationship between innovation and institutions, as well as the interdependence of innovation and creativity. This is followed by three parts that target innovation as a social process: innovation, networking and communities; innovation in permanent spatial settings; and innovation in temporary and virtual settings. Finally, the relationships between innovation, entrepreneurship and market making and wider issues regarding the governance and management of innovation are discussed, followed by some remarks about the unique characteristics of the edited volume.
Uwe Cantner and Simone Vannuccini
The concept of lock-in can certainly be listed among those weighing most heavily in the conceptual toolbox used by scholars of innovation and evolutionary economics. Processes of competitive diffusion, or choice between alternatives of ‘unknown merit’, are known to generate lock-in, that is, inflexible outcomes, and this finding has critical implication for the study of economic dynamics and history-dependent processes. In this chapter, we first summarize what is known in the economic literature about the nature of lock-in, and we discuss if lock-ins are really inescapable, especially when innovation is concerned. Second, we employ the replicator dynamics model, suggesting a parallel between monopolization and lock-in, and show that the convergence of a system to the dominance of a single alternative does not have to be inescapable; rather, it is strongly dependent on the regime and parameters characterizing the competition between alternatives. In particular, the interaction of positive reinforcements driving market selection and negative reinforcements occurring at the level of each individual alternative generates outcomes far from the lock-in into one uncontestable alternative.
Andy C. Pratt
This chapter seeks to understand innovation in the cultural economy. It argues that the normative innovation literature obscures innovation in the cultural economy, and hence this literature and its conceptualisation of knowledge and innovation needs to be revised. The chapter is divided into three parts. First, I review normative innovation practices and their relationship to the philosophy of science. Second, I argue that due to normative assumptions about knowledge, the focus of analysis and empirical investigation is on the transfer of knowledge. The third part proposes a more helpful focus, namely the translation of knowledge, one that expresses the generative, relational and situated nature of knowledge making. The normative model of the ‘leaky pipe’ analogy of knowledge transfer is where the very formation of knowledge is assumed to be concerned with incremental change (that is, minimally innovative). By contrast, the notion of ‘making in translation’ is conceived of as a constructive and constitutive practice: one that is focused on radical change.
In the new global economy centered on knowledge, innovation and environmental protection, most governments acknowledge nowadays the strategic importance of the environmental goods and services industry (or eco-industry). Yet, the dynamics which underlies innovation and knowledge creation in this booming sector is still poorly understood. This chapter first offers a brief outlook of the eco-industry, its history, scope and recent trends. It next argues that green innovations nowadays result from a Smithian process of broader and broader division of labor. Public policies and managerial approaches that might foster this development are then briefly discussed.
Andrew Herod, Graham Pickren, Al Rainnie and Susan McGrath-Champ
Contemporary capitalism produces huge quantities of commodities whose use value is frequently short-lived, often because capitalists’ need to secure profits involves the planned obsolescence of their products. Such waste, however, regularly contains valuable materials which can be retrieved and reused as inputs for new commodities. In this chapter, then, we explore the economic paths – what we call Global Destruction Networks (GDNs) – through which some of this waste travels as it is processed and its components recovered. In many ways, these GDNs are Other to the more familiar Global Production Networks (GPNs) in which commodities are first assembled, except that they involve the taking apart of discarded products. The chapter outlines three GDNs – those involving e-waste, shipping and vehicles – to argue that an important mechanism by which to connect the workings of GDNs with those of GPNs is through following the movement of value, conceptualised here in Marxian terms of congealed labour.