Spatial distribution of innovation networks, technological competencies and degree of novelty in emerging economy firms

ABSTRACT

This paper analyses the relationship of the accumulation of technological competencies at the firm level, the spatial distribution of the firm's innovation networks and the degree of novelty of product innovation. Firm-based primary data collected in two innovative regions in emerging economies are used to predict higher degrees of novelty in emerging economy firms. Similarly to advanced economy firms, the results show that international linkages are associated with higher degrees of novelty. However, new-to-the-world innovation in emerging country firms is fundamentally externally driven, suggesting that international linkages seem to be a compensating mechanism for the initially lower technological capabilities rather than a complementary source of knowledge.

KEYWORDS:

• Product innovation
• emerging economies
• network
• technological competencies

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. Since the work of Powell, Koput, and Smith-Doerr (1996) in organizational, business and international business literature, scholars have dedicated some works to tracking the structure and the map of the network looking at the position and embeddedness of the firms in those networks (Ahuja, 2000; Owen-Smith & Powell, 2004) as well as the social structure and evolutionary path of the linkages which influence their performances (Brass, Galaskiewicz, Greve, & Tsai, 2004; Gulati, 1998; Gulati, Nohria, & Zaheer, 2000). The focus has been on inter-organizational relations, in particular for knowledge-intensive industries (Bunker Whittington, Owen-Smith, & Powell, 2009) and how the network position can become a source of competitive advantage (Greve, 2009; Owen-Smith & Powell, 2004). More recently, the contributions of scholars in economic geography building on the local-global debate (Bathelt et al., 2004) have addressed studying the interactions of innovation networks with territorial dynamics and regional development (Cooke, 2013; van Egeraat & Kogler Dieter, 2013; Parrilli, Nadvi, & Yeung, 2013). Although with contributions in both fields, there is still a lack of integration of the different literature in relation to the role of international linkages (Hervas-Oliver & Boix-Domenech, 2013).

2. In China, questionnaires were also collected in the provinces of Tianjin and Hebei that together with Beijing constitute the Jing-Jin-Ji region. For this specific paper, only the metropolitan region of Beijing was considered.

3. It is necessary to take into account that the total software companies in Beijing included more than 6000 firms. Due to time and funding constraints, our goal was to reach a minimum of around 200 responses in each area for the software sector for Pune and the Jing-Jin-Ji region (this last one includes the metropolitan region of Beijing considered in this analysis).

4. The survey can be downloaded from http://globinn.circle.lu.se/our-projects-2/, in the project section: ‘Emerging trends in Asia: From low-cost producers to innovators’.

5. One important limitation of this analysis is the non-inclusion of non-innovative firms and the associated bias (Nieto & Santamaria, 2007). Unfortunately, due to the way in which the questionnaire was constructed, it was not possible to include them simultaneously. We acknowledge that this is a limitation of our current study which should be addressed as data become available. We are thankful to one anonymous referee for pointing this out.

6. Product innovation refers here to the introduction of new or significantly improved goods and services.

7. In the econometric model, the excluded dummy was the first category in all the sets of variables related to collaboration and sourcing.

8. A firm is considered to be foreign-owned when it has a minimum of 30% of foreign capital (Saliola & Zanfei, 2009).

9. An ordered logit estimates one coefficient for each regressor that measures the effect of that regressor on the probability of moving from a lower class to the higher ones (i.e. from a lower degree of innovation to a higher degree). Since classes were more than two (in our case three) but the estimated coefficient of each regressor was just one, the implicit assumption was that the same coefficient can be applied from the passage to the low class to the other two (medium and high) and to the passage from the low and medium classes to the high one. This assumption must be tested. The Brant test (Brant, 1990) is commonly used to check for this assumption, called ‘Proportional Odds Assumption'. In our case the POA was violated. When this happens, the standard technique is to use a generalized version of the ordered logit model (Williams, 2006).

10. Some of these subsidiaries were probably foreign subsidiaries which aimed to exploit the local pool of skilled labour for their innovations (Lewin, Massini, & Peeters, 2009).

Additional information

Funding

This work was supported by the Swedish Research Council.