Study of Norwegian Companies Finds that Business Clusters are Irrelevant for Innovation
Business clusters could be less relevant as drivers of innovation than has been commonly assumed. The Stavanger Centre for Innovation Research analysed 1,600 companies with more than 10 employees located in the five largest Norwegian city-regions. Rather than national clusters, international cooperation or “global pipelines” were identified as the main drivers of innovation.
The researchers conducted a specifically tailored survey of the level of innovation of 1604 firms located in Oslo, Bergen, Stavanger, Trondheim, and Kristiansand. The goal was to determine the geographical dimension of the sources of innovation, and the factors behind the propensity to innovate in Norwegian firms.
The results are presented in a research paper, authored by Rune Dahl Fitjar of the Stavanger Centre for Innovation Research and Andres Rodriguez-Pose of the London School of Economics. The authors draw the following conclusion from their data: “The results indicate that firm innovation in urban Norway is mainly driven by global pipelines, rather than local interaction. The most innovative – both in terms of basic product innovation and radical product and process innovation – firms are those with a greater diversity of international partners.” The results also show that the roots of this greater innovative capacity lie in a combination of different firm characteristics (firm-size, share of foreign ownership), sector and cultural characteristics (e.g. the level of open-mindedness of managers).
The traditional view has been that physical proximity within city-regions is key for the innovative capacity of firms. More recent theories of “pipelines” have also looked for the roots of innovation and knowledge diffusion outside the region. The consensus emerging from these strands has been that local and global interaction operate together in fostering firm-level innovation within regions and are perfectly complementary.
The authors of the paper were critical of this view, however: ”The problem with the view of global pipelines and local interaction reinforcing one another is that it has always been tested in specific case studies where it often seems to have worked.” They were sceptical whether this holds true for a large number of companies as well. They missed in the existing data the “micro-picture” what is happening the micro-picture of what is happening at the level of the firm. “We know a lot about how the cluster behaves as a system, but relatively little about which types of firms engage in which type of interaction, beyond a small number of representative firms.”
Their research supported their doubts about the existing assumption. After controlling for company size, industry type and share of foreign ownership, the authors found that the more international partners a firm had, the more likely it was that they were innovators. Local interaction, on the other hand, was not found to be driving innovation among agglomerated firms. “The benefits of face-to-face collaboration, which is likely to be more frequent among regional partners, are outweighed by the gains from seeking out targeted international partners that possess the knowledge needed by the firm in order to innovate.”
References / further information:
- Research paper (PDF - direct link): Fitjar, Rune Dahl / Rodríguez-Pose, Andrés: When local interaction does not suffice: Sources of firm innovation in urban Norway. Paper provided by Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales in its series Working Papers with number 2011-05.
- Information about the paper: http://ideas.repec.org/p/imd/wpaper/wp2011-05.html
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