Innovation Clusters in Technological Systems: A Network Analysis of 15 OECD Countries for the Middle '90s

The paper aims at investigating how innovations cluster in different technological systems (TSs) when their “techno-economic", rather than “territorial" space is considered. Innovation clusters of economic sectors are identified by applying network analysis to the intersectoral R&D flows matrices of 15 OECD countries in the middle '90s. Different clusterization models are first tested in order to detect the way sectors group on the basis of the embodied R&D flows they exchange. Actual clusters are then mapped in the different TSs by looking for intersectoral relationships which can be qualified to constitute “reduced-TSs" (ReTSs). In all the 15 TSs investigated the technoeconomic space appears organized in hierarchies, along which its constitutive sectors group into clusters with different density and composition. Once ReTSs are looked for, the 15 TSs display highly heterogeneous structures, but with some interesting similarity on the basis of which different clusters of TSs can be identified in turn.Innovation clusters; technological systems; R&D expenditure; embodied innovation flows

From techno-scientific grammar to organizational syntax. New production insights on the nature of the firm

The paper aims at providing the conceptual building blocks of a theory of the firm which addresses its "ontological questions" (existence,boundaries and organization) by placing production at its core. We draw on engineering for a more accurate description of the production process itself, highlighting its inner complexity and potentially chaotic nature, and on computational linguistics for a production-based account of the nature of economic agents and of the mechanisms through which they build ordered production sets. In so doing, we give a "more appropriate" production basis to the crucial issues of how firm's boundaries are set, how its organisational structure is defined, and how it changes over time. In particular, we show how economic agents select some tasks to be performed internally, while leaving some other to external suppliers, on the basis of criteria based on both the different degrees of internal congruence of the tasks to be performed (i.e. the internal environment), and on the outer relationships carried out with other agents (i.e. the external environment)

Environmental Innovations, Local Networks and Internationalization

This paper investigates the drivers of the environmental innovations (EI) introduced by firms in local production systems (LPS). The role of firm network relationships, agglomeration economies and internationalization strategies is analysed for a sample of 555 firms in the Emilia-Romagna region, North-East of Italy. Cooperating with ‘qualified’ local actors – i.e. universities and suppliers – is the most important driver of EI for most firms, along with their training policies and IT innovations. The role of agglomeration economies is less clear and seems to depend on the EI propensity of more locally oriented firms playing in district areas, which might even turn agglomeration into dis-economies. Networking effects and agglomeration economies are instead found to strongly promote the adoption of EI by multinational firms, thus highlighting the importance of local-global interactions. We provide some interesting findings for particular kinds of challenging EI in fields as CO2 abatement and ISO labelling, generally extending the analysis EI driver by joining local and international factors.Eco-Innovation, Foreign Ownership, Networking, District, Agglomeration Economics, Local Production Systems

On indirect trade-related R&D spillovers: the role of the international trade network

The paper aims at investigating the role that one country's position in the international trade network has in attracting knowledge and technology flows to it. By referring to "indirect" Research and Development (R&D) spillovers, we argue that not only is this position responsible for the number of R&D flows one country benefits from, but also for their economic impact to an extent depending on the number of trade relationships which separate it from its trade partners. This argument is developed by extending to trade-related R&D spillovers the intersectoral Average Propagation Length (APL) of exogenous shocks in sectoral final demand or value added. The inter-country APL of foreign R&D is then used to weight the (total factor) productivity impact of the foreign R&D stock available to one country, along with that of the R&D stock produced domestically. Different specifications of such an econometric model are estimated with respect to 21 OECD countries over the decade 1995-2005. The results are consistent with those of the models which explicitly recognize the role of indirect R&D spillovers: in particular, the TFP elasticity of the foreign R&D available stock is greater than that of the foreign R&D produced stock. The APL based results are however more robust, as they depend on the actual economic distance in trade of one country from the others, rather than, as in previous models, on the (most fitting) estimated value of its economic consequences.Average Propagation Length, International R&D spillovers, International trade network, Total Factor Productivity

Production and financial linkages in inter-firm networks: structural variety, risk-sharing and resilience

The paper analyzes how (production and financial) inter-firm networks can affect firms’ default probabilities and observed default rates: an issue the recent crisis has brought to the front of the debate. A simple theoretical model of shock transfer is built up to investigate some stylized facts on how firm-idiosyncratic shocks tend to be allocated in the network, and how this allocation changes firms’ default probability. The model shows that the network works as a perfect “risk-pooling” mechanism, when it is both strongly connected and symmetric. But the resort to “risk-sharing” does not necessarily reduce default rates in the network, unless the shock they face is lower on average than their financial capacity. Conceived as cases of symmetric inter-firm networks, industrial districts might have a comparative disadvantage in front of “heavy” financial crises such as the current one.Firm clusters, industrial districts, interlinking transactions,resilience, systemic risk

On the R&D giants' shoulders: Do FDI help to stand on them?

The paper investigates the extent to which outward FDI affect the MNC's capacity of entering (and remaining in) the club of top R&D world investors, benefiting from performance gains in both financial and economic markets. By merging the European Industrial Research and Innovation Scoreboard with the fDi Markets dataset, we find supporting evidence. Increasing the number of FDI projects helps firms overcome the discontinuities that, in the distribution of R&D expenditures, separate the group of the largest world R&D investors from the top of them. The same is true for the number of FDI projects in R&D, which are also more important than greater FDI portfolios in becoming a top R&D spender. Furthermore, unlike FDI in general, more FDI in R&D guarantee firms to remain in this top club of firms as it increases their capacity of resisting competition for a place among the top R&D spenders. Results at the extensive margin (i.e. the number of FDI projects) are confirmed with respect to the scale of FDI projects (i.e. at the intensive margin). However, increasing their size is not enough to become one of the highest ranking R&D firms. Policy implications about the support to R&D internationalisation are drawn accordingly.JRC.J.2-Knowledge for Growt

Environmental innovations, local networks and internationalization

This paper investigates the drivers of the environmental innovations (EI) introduced by firms in local production systems (LPS). The role of firm network relationships, agglomeration economies and internationalization strategies is analysed for a sample of 555 firms in the Emilia-Romagna region, North-East of Italy. Cooperating with 'qualified' local actors - i.e. universities and suppliers - is the most important driver of EI for most firms, along with their training policies and IT innovations. The role of agglomeration economies is less clear and seems to depend on the EI propensity of more locally oriented firms playing in industrial district areas, which might even turn agglomeration economies into dis-economies. Networking effects and agglomeration economies are instead found to strongly promote the adoption of EI by multinational firms, thus highlighting the importance of local-global interactions. We provide some interesting findings for particular kinds of challenging EI in such fields as CO2 abatement and ISO labelling, generally extending the analysis of EI drivers by joining local and international factors.Eco-innovation, foreign ownership, networking, district, agglomeration economics, local production systems

The General Profile of the Outsourcing Firm Evidence for a Local Production System of Emilia Romagna

The paper aims at ‘embedding’ the outsourcing firm by considering it as a four-fold unit of analysis: i.e. as an organizational, production, industrial and innovation unit. Theoretical correlations between outsourcing decisions and outsourcing variables are formulated and then tested with respect to a representative cross-sectional sample of firms of a local production system in Emilia Romagna (that is, Reggio Emilia). The main result of the paper is that outsourcing decisions are indeed affected by the organizational and industrial relations typical of the context firms are embedded in. Furthermore, the general profile of the Reggio Emilia outsourcing firm is strategic rather than operative. In particular, tapping-into the provider’s resources and competences to eventually promote technological innovation seems more relevant than searching for lower costs by contracting out.Outsourcing; transaction costs; industrial relations; innovation

Constructing intersectoral innovation diffusion networks with input-output: how to get relative flows? An illustrative application to six OECD technological systems for the middle '90s

The paper aims at addressing some methodological issues in applying Social Network Analysis indicators to the investigation of nation-wide intersectoral innovation ows matrices. The majority of SNA techniques require dichotomization of the original matrices and suitable relativization procedures, in order to avoid size-biases. The relativization procedures used so far suffer from some limitations, as they either alter the meaning of SNA indicators or do not take into account the composition of countries' final demand. In order to overcome these limitations, we propose two new different methods and compare them with the existing ones on the basis of their rationale. Rather than with respect to a single cut-off, the comparison is carried out by working out SNA indicators distributions. An illustrative application is carried out by comparing the technological systems of six structurally different OECD countries in the mid-'90s. In so doing, the robustness of their conventional innovation ranking is tested and discussed

The "potential" face of absorptive capacity. An empirical investigation for an area of 3 European countries

This paper draws on the multi-dimensional characterization of absorptive capacity (AC) to empirically investigate the antecedents and the effects of its "potential" dimension (PAC): i.e., the firm's capacity of acquiring and assimilating external knowledge, as distinguished from its "realized" transformation and exploitation (RAC). Based on a sample of about 10,500 firms for an area of 3 EU countries (Italy, Germany and Spain) we find that the firm's reliance on external knowledge in general increases its PAC, and that this effect is magnified by the internal shocks the firm faces. However, both these effects find relevant exceptions when different kinds of external sources are considered, at different kinds of distance from the absorbing firm. Unexpectedly, social integration mechanisms in the firm makes PAC less, rather than more, inductive of innovation outcomes. On the contrary, the human capital of the firm has a positive moderating role on the PAC effects. A possible trade-off in the exploitation of the externally assimilated knowledge is suggested.absorptive capacity; external knowledge; innovation