Social Capital and Effective Innovation in Industrial Districts: Dual Effect of Absorptive Capacity

This paper deals with the factors that affect the heterogeneity in the access to knowledge and its exploitation through innovation in firms located in industrial districts. The aim of the study is to analyze the moderating role of the components of the absorptive capacity – identification and combination – in the process that leads firms in industrial districts with social capital to obtain effective innovations through the knowledge acquisition. We have developed the empirical analysis on a sample of 166 firms located in the industrial districts of the footwear industry in Spain. Findings suggest that the firms in industrial districts improve the acquisition of novel and valuable knowledge from external networks of information when they have identification capabilities to explore their potential. The results also indicate combinative capability strengthens the acquired new knowledge to develop and exploit successful innovations.     

Innovation Dynamics in Catch-Up Firms: Process, Product and Proprietary Capabilities for Development

This paper analyses how firms organize for industrial innovation where they are significantly below being globally competitive. It investigates the dynamics by which catch-up firms in developing countries (DCs) go beyond the boundaries assigned to them by their national environments and by the world's leading technology-driven firms. The paper analyses cases of how a range of successful firms managed to break these boundaries to increase competitiveness through innovation. Our key argument concerns the innovation dynamics of catch-up firms. We argue that aspirant firms approach the frontier differently to leaders. We construct and use a tool, based on resource-based theory, to map the alternative approaches taken by firms to develop new capabilities. It focuses on the relationship between process and product innovation and the nature of proprietary competencies. This allows the development of approaches to build strategies for innovation in DC catch-up firms and thereby transform development dynamics.     

What Drives (or Hampers) Outsourcing? Evidence for a Local Production System in Emilia Romagna

The paper investigates the drivers of the outsourcing decisions of firms located in a specific local production system. Different kinds of drivers are considered drawing on different strands of the literature, considering the firm from an organizational point of view, and as a production, industrial and innovation unit of analysis. Theoretical correlations between outsourcing decisions and variables are formulated and tested with respect to a representative cross-section sample of the firms in Reggio Emilia, a local production system in Emilia Romagna. The main result of the paper is that, in the local context investigated, transaction costs do not seem to be a significant driver of outsourcing. The decision to externalize is rather driven by other arguments, strongly based on the resource–competence approach, factors such as the need for tapping into the providers to promote technological innovation. On the other hand, these drivers are contrasted by the industrial relations of the firms, as workers and workers' representatives significantly hamper it, possibly fearing job losses, or at most expect to be involved in the relative decision in order to make it possible or even spur it. These results have important implications, both at the research level—at which they suggest to complement the transaction cost analysis of outsourcing with that of other approaches—and at the management level—at which they support the thesis that external organizational innovations, such as outsourcing, cannot neglect internal organizational aspects, such as human resource management and industrial relations.     

Dancing in shackles: interactive learning of industrial design firms in Beijing

The paper addresses the structure-agency dilemma of interactive learning in innovation systems, namely the structuration process of how macro-conditions shape micro-actions of firms and the agency process of how firms react to macro-structures. We argue organizational boundaries of firms are an important dimension to tackle the structure-agency dilemma of interactive learning. Specifically, we propose the structuration process can occur through a boundary-stabilizing mechanism while the agency process can happen with a boundary-changing mechanism. We investigate the newly established industrial design firms in China and find that industrial policies, a weak design education system, a fixed-price practice for industrial designs set up clear boundaries between industrial designers and manufacturers, which restrict their interactive learning. To the agency process, we observe a few industrial design firms upgrade by extending their organizational boundaries upstream or downstream in their value chains. Further, we suggest the structuration and agency processes can be context-specific.     

Quantifying the benefits of participating in an industry university research center: An examination of research cost avoidance

The challenges to conducting valid and complete outcome evaluations of cooperative research activities, like the National Science Foundation Industry/University Cooperative Research Centers (IUCRC) Program, are daunting. The current study tries to make a small but important contribution to this area by attempting to develop quantitative estimates of one center benefit - R&D cost avoidance. Cost avoidance is operationalized as R&D costs industrial members would have incurred but did not, because they participated in university-based industrial consortia, minus the costs of belonging to the consortia. Data were collected from a total of 18 industrial sponsors from three IUCRCs on 35 different research projects. Findings indicate that some firms do avoid R&D costs by participating in an IUCRC but the prevalence of this benefit varies across centers and across firms. The implications of these findings for policy, practice and future research are discussed.     

Overcoming Undesirable Knowledge Redundancy in Territorial Clusters

This work analyzes the existence of redundant knowledge associated with geographic networks of firms. Specifically, our research focuses on how firms can avoid inefficient redundancy ties derived from territorial clusters. We propose that firms embedded in a dense and strong-tie network generate redundant knowledge flows. However, they may use structural dispersion to mediate and overcome this limitation. Our empirical study was conducted drawing on the Spanish ceramic tile industrial cluster to test the potential association between social capital and redundancy. Our findings support the idea that structural dispersion mediates the effects of strong ties and the generation of knowledge redundancy.     

Changes in manufacturing facility-, network-, and strategy-types at the Michelin North America Company from 1950 to 2014

Large manufacturing firms operate networks of facilities which they design to achieve particular manufacturing strategies. Facilities, networks and strategies are of several distinct types. The facility-, network- and strategy-types used by a firm depend on the competitive environment in which a firm operates. This paper examines the facility-, network- and strategy-types used by the Michelin North America Company during the period from 1950 to 2014. The examination shows how three changes in the competitive environment (changes in tariffs and government industrial policy, the 1964 Canada – United States Automotive Trade Agreement, and the 1996 North American Free Trade Agreement) triggered significant changes in these types. The examination produces insights into categorisations of facility-, network- and strategy-types that are useful for understanding how large firms operate, how we can predict what changes large firms will make to their facilities, network and strategy and how stakeholders such as employees, suppliers and governments can manage the risks of working with large firms.     

Flexible practices for mass production goals: economic governance in the Indian automobile industry

This paper explains the remarkable restructuring of the Indianautomobile industry. It argues that firms have had to deploynew governance modes (flexible industrial practices) for economiccoordination to overcome supply bottlenecks and meet expandingdemand. Firms that failed to adopt these practices performedpoorly, while firms that attained economies of scale were ableto graduate to exploiting economies of scope. The industry experiencesuggests that new governance modes can serve mass productiongoals in developing economies and not just cushion market volatility,for which they were designed.     

Implicit Industrial Policy: The Triumph of Britain and the Failure of France in Global Pharmaceuticals

This study illustrates a new view of industrial policy, basedon the emerging organizational economics theory of the firm.Organizational economics regards the firm as a collection ofskills/ capabilities embedded in a network of relations withexternal transactors. Industrial policy shapes the local network,thereby defining domestic firms and delimiting their skill accumulation.In the pharmaceutical industry, British regulations of safety,pricing, basic research and foreign direct investment createda demanding local competitive environment for British firms,training British firms in skills that would facilitate globalcompetitiveness. In France, very different regulations enticedFrench ethical drug firms to focus on a protected local marketincreasingly desynchronized from the worldwide industry. Thus,industrial policy laid the ground work for the spectacular riseto global success of UK pharmaceutical firms and the correspondingfailure of French firms.     

Innovation in Industrial Districts: Evidence from Italy

The aim of this paper is to show that Italian manufacturing firms belonging to Marshallian industrial districts carry out a higher innovative effort than is usually acknowledged. The empirical analysis makes use of a panel of 1,218 district and non-district firms belonging to traditional sectors. Data refers to the years 1992 and 1995. We have estimated an augmented Cobb-Douglas production function. The estimates make it possible to empirically identify three different determinants of firms' productivity: (i) the intentional innovative activity; (ii) the “district effect”; and (iii) the joint district and innovation effect. The results show that firms' membership in industrial districts and product innovations are key factors in explaining the productivity of firms working in traditional Italian sectors.     

The strategic role of manufacturing

Through empirical research a model is provided that represents strategic manufacturing effectiveness. It shows what are the important factors that directly affect strategic manufacturing effectiveness, how they relate to each other, and how they can be measured. Research is done to identify and define the stages of strategic manufacturing effectiveness. It links the four-stage framework to the concept of strategic groups and identifies two strategic groups whose effectiveness has been shown to relate positively to manufacturing competence. Details are presented on the positive effects that strategic manufacturing effectiveness has on manufacturing performance, the effects on types of industry, the sizes of firms and the types of production process used.     

Innovation and growth in KIBS: the role of clients’ collaboration and service customisation

In this paper, we analyse KIBS firms and posit that two core attributes of KIBS, namely collaborative relationships with clients and product customisation, foster the ability to develop successful, new product innovations. We disentangle the role of customisation and collaboration choices by looking at how they jointly affect the impact of innovation over firms’ performance, asking to what extent and how firms should collaborate with clients and customise their services. We test our hypotheses on a sample of Italian KIBS firms. Our results show that product innovations that are new to the industry are relevant and, counter intuitively, show that most growing KIBS firms do not have the highest service customisation and collaboration breadth with their clients. Most growing firms develop mass customisation strategies and they leverage on focused collaboration strategies with clients.     

Maturing,Technology-Based,Born-Global Companies: Surviving Through Mergers and Acquisitions

To date, there has been little research about the corporate growth of born-global companies and relatively little data exist about their maturation, survival as independent companies (or failure to do so) and their international strategies. The present paper is based on an empirical study of Israeli technology-based companies that were identified in the late 1990s as born global. We collected data about the continuing development of these firms for the decade spanning 2000–2009. Our findings show that maturing technology-based, born-global companies can increase their chances of survival by acquiring other firms. Although such acquisitions do not increase profits, they allow born-global firms to continue increasing their sales and to expand and upgrade their product line, which in turn increases their chances of remaining independent. The data also show that if the firms prefer to merge with another company, they are in a better position if they do not acquire any other firms beforehand. Finally, our data show that although the majority of born-global companies can continue operations if they survived the first decade, they are not highly successful on the measures of growth and shareholder wealth. One of the recommendations of this study is that for maturing, technology-based, born-global companies to remain successful, they must be more aggressive in their M&A strategy than they are at the moment.     

Encouraging inherently safer production in European firms: a report from the field

It is now generally recognized that in order to make significant advances in accident prevention, the focus of industrial firms must shift from assessing the risks of existing production and manufacturing systems to discovering technological alternatives, i.e. from the identification of problems to the identification of solutions. Encouraging the industrial firm to perform (1) an inherent safety opportunity audit (ISOA) to identify where inherently safer technology (IST) is needed, and (2) a technology options analysis (TOA) and to identify specific inherently safer options that will advance the adoption of primary prevention strategies that will alter production systems so that there are less inherent safety risks. Experience gained from a methodology to encourage inherently safer production (ISP) in industrial firms in the Netherlands and Greece is discussed. Successful approaches require both technological and managerial changes. Firms must have the willingness, opportunity, and the capability to change. Implications for the EU Seveso, IPPC, and EMAS Directives are also discussed.     

The Role of Time in Assessing the Economic Effects of R&D

This study investigates the impacts of R&D on firm performance. It extends previous research by constructing alternative stocks of R&D‐Capital that take into account that time plays an important role in assessing the pay‐off of industrial research. The results show that even when we employed R&D‐Capitals that placed more emphasis on the industrial research that had been undertaken 7 years ago, the effects of R&D were very (statistically) significant and relatively high, thereby suggesting that the life of R&D (on average) tends to be long. The results however, vary across organizations depending on both firm size and the technological opportunities that a company faces. It appears that the depreciation rate of R&D investments is higher in the case of technologically sophisticated firms. In contrast, strategic investments in industrial research generate a relatively constant effect on the performance of other firms, supporting the notion that the corresponding returns for such firms decay slowly.     

Have Chinese universities embraced their third mission? New insight from a business perspective

Have Chinese universities, after enormous investment over the past decade, embraced the university’s third mission—contributing to industrial and technological progress? The literature has not sufficiently addressed this question. This study intends to advance understanding of this issue by empirically addressing this question from a business perspective in a bold and unconventional way. Unlike prior studies that simply used contingent and institutional factors to describe the link between Chinese universities and industrial firms by measuring such aspects as patent licensing, co-patenting, and co-authoring, our work goes further and applies longitudinal analysis to examine the ways firms access university-level knowledge and the impact of such knowledge on firm innovation outputs. We propose that if Chinese universities embraced their third mission, then we would observe a positive effect of university–industry collaborations on firms’ subsequent innovation outputs. Empirical results based on a sample of the top 100 Chinese electronic firms in terms of output value support our hypothesis. Specifically, university patent licensing and co-patenting between universities and firms was found to positively affect firm innovation outputs. Moreover, we found that geographical distance and collaboration dominance moderate the co-patenting–innovation output relationship.     

Management of Schemes and Threat Prevention in ICS Partner Companies Security

An analysis of the recent major security incidents related to industrial control systems, revealed that most had been caused by company employees. Therefore, enterprise security management systems have been developed to focus on companies’ personnel. Nonetheless, several hacking incidents, involving major companies and public/financial institutions, were actually attempted by the cooperative firms or the outsourced manpower undertaking maintenance work. Specifically, institutions that operate industrial control systems (ICSs) associated with critical national infrastructures, such as traffic or energy, have contracted several cooperative firms. Nonetheless, ICT's importance is gradually increasing, due to outsourcing, and is the most vulnerable factor in security. This paper proposes a virtualized security management scheme for the resident cooperative firms in the industrial control infrastructure. Since such companies often cannot afford adequate investment in security, the scheme is to let an ICS company provide the virtualized system. One of its merits is the convenience of controlling a VDI server at the center. The cooperative firms were classified, based on their respective security levels, and statistics were collected throughout a four-year period for the results. This paper analyzes the policies and virtualization systems that have been applied to the security of the partner companies, which engaged in ICS security. A suitable model for ICS security was then proposed by analyzing their effects on the system efficiencies, based on the comparisons of the security inspection results obtained before and after virtualization. The proposed system is expected to contribute to industrial safety.     

Small worlds,inheritance networks and industrial clusters

The performance of firms within industrial clusters has been the subject of a multitude of studies. The organizational attributes inherited by spinoffs from parent firms is one explanation behind performance premiums. This paper examines the relationship between a spinoff’s network and its geographic location in an industrial cluster. We hypothesize that there is a negative relationship between a spinoff’s network efficiency and its distance from the cluster’s centroid. Although recent literature infers that the transmission of knowledge in industrial clusters is accomplished via inherited network ties, this has not been directly measured. This paper aims to fill that research gap. We find that, after controlling for firm size, parent size and age, there is indeed a statistically significant and negative relationship between network efficiency and geographic distance to a cluster’s core.     

Epistemic Communities and Cluster Dynamics: On the Role of Knowledge in Industrial Districts

This paper questions the prevailing notions that firms within industrial clusters have privileged access to “tacit knowledge” that is unavailable—or available only at high cost—to firms located elsewhere, and that such access provides competitive advantages that cause the growth and development of both firms and regions. It outlines a model of cluster dynamics emphasizing two mutually interdependent processes: the concentration of specialized and complementary epistemic communities, on the one hand, and entrepreneurship and a high rate of new firm formation on the other.