High technology localization and extra-regional networks

Abstract

Firms in spatial concentrations of advanced-technology activities do not constrain their knowledge inputs to opportunities found within their industrial cluster. Rather, firms seeking extra-regional markets augment their in-house resources by means of material (embodied technology) and knowledge inputs obtained from sources at the extra-regional scale in addition to within the region. Literature is reviewed on the clustering of firms and their network geography, models of open and closed industrial systems, and absorptive capacity. The latter is used to interpret the search for knowledge undertaken by firms, which are discussed in terms of their organizational differences and strategic choices. A sample of manufacturing establishments from the electronics cluster in the Toronto metropolitan region (Canada) shows firms that are export-intensive have significantly stronger international input connections, especially with consultants and alliance partners. Export orientation is associated with higher levels of expenditure on the in-house generation of knowledge, more innovation inputs from external sources, and distinctive network geographies. Differences in network relations occur within and between three organizational groups of firms – foreign affiliates, multi-location and single-location domestic firms. Geographically wide-ranging networks are interpreted in terms of opportunities in extra-regional locations compared with local supplies. Regional innovation policy implications are considered.

Keywords:

• network
• high technology
• electronics
• cluster
• export

Acknowledgements

Grateful acknowledgement is made of financial support by the Social Science and Humanities Research Council of Canada, survey assistance by Kieran Donoghue, Damian Dupuy and Richard Koo, discussion in the seminar of the Program on Globalization and Regional Innovation Systems, Centre for International Studies, University of Toronto, and feedback received from an anonymous referee.

Notes

 As used here, the term network denotes the assemblage of input connections and output relationships of firms involving other establishments, firms or institutions. Among others, it includes alliances, and established relationships with consultants, other producer service firms, manufacturers (as sources of contract services, parts and components) and other sources of research expertise.

 This also true of more recent systems-integrated models (Gibbons 1995).

 Some more recent work has reported cases in which the external connections are important (Cooke 1998, Gertler et al. 2000).

 See also Feldman (2000).

 Although technical knowledge is highly specific, Breschi and Lissoni (2001) argue that its jargon is clear to a restricted ‘epistemic community’ which may be spatially dispersed.

 Across the inter-industry and cultural divides, however, different conventions may be encountered that impede understanding. These are associated especially with labour markets (regions) in terms of skills, training and experience (Gertler 1995).

 This is not pursued by Best (2001); his purpose is to compare a new pattern of regional networking in Boston’s Route 128/I-495 to that found in Silicon Valley.

 MacPherson (1987, 1988) used a mixed sample of small manufacturing establishments in which electronics firms were important among innovation-export firms.

 In line with the Frascati Manual (OECD 1994), the federal government limits its definition of R&D for tax credits to experimental aspects of product or process development. As Walsh (1996) indicates this does not cope satisfactorily with design and related inputs.

 The ‘Top 100 Corporate R&D Spenders List’ for Canada is at http://www.researchinfosource.com

 The inclusion of Telecommunications equipment, Electronics, Scientific and Professional equipment, and Aerospace firms specializing in electronics follows Suarez-Villa and Karlsson (1996).

 Usually questionnaires were directed to the Operations or R&D Manager or a Vice-President.