The Elgar Companion to Innovation and Knowledge Creation
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The Elgar Companion to Innovation and Knowledge Creation

Edited by Harald Bathelt, Patrick Cohendet, Sebastian Henn and Laurent Simon

This unique Companion provides a comprehensive overview and critical evaluation of existing conceptualizations and new developments in innovation research. It draws on multiple perspectives of innovation, knowledge and creativity from economics, geography, history, management, political science and sociology. The Companion brings together leading scholars to reflect upon innovation as a concept (Part I), innovation and institutions (Part II), innovation and creativity (Part III), innovation, networking and communities (Part IV), innovation in permanent spatial settings (Part V), innovation in temporary, virtual and open settings (Part VI), innovation, entrepreneurship and market making (Part VII), and the governance and management of innovation (Part VIII).
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Chapter 20: Social networks and innovation

Michel Ferrary and Mark Granovetter

Abstract

The failure of several policy-makers around the world to reproduce the Silicon Valley cluster reveals the misunderstanding of the innovative dynamic in Silicon Valley. This study uses complex network theory to analyse the complex innovative capability of Silicon Valley and to understand the heterogeneity of agents and the multiplexity of ties that support the creation and development of high-tech start-ups. Silicon Valley is a complex network, whose nodes are companies and whose links represent the various economic and financial ties connecting them. In a systemic perspective, the presence of a specific agent in a network induces specific interactions with other agents that could not take place if this agent were not there. Thus, the diversity of agents influences the dynamics of the system. The presence of venture capital firms in an innovative cluster opens potential specific interactions with other agents in the network (universities, large companies, laboratories) that determine a particular dynamic of innovation. What is distinctive about Silicon Valley is its complete and robust complex system of innovation supported by social networks of interdependent economic agents in which the VC firms have a specific function. Our perspective examines five different contributions of VC firms to Silicon Valley: financing, selection, collective learning, embedding and signalling.

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