Reaching Out and Reaching Within: A Study of the Relationship between Innovation Collaboration and Innovation Performance

Abstract

A large body of research has thoroughly discussed and examined agglomeration advantages for innovation of geographically concentrated firms. However, there is an increasing awareness that this intellectual tradition tends to overemphasize the role of geographic proximity in the transfer of knowledge between firms and to under-theorize the contribution of nonlocal knowledge flows. With a sample of 143 manufacturing firms from Singapore, this research attempts to answer three interrelated questions: (1) Does local networking effort provide firms with added value above and beyond what is available to them by just “being there?” (2) Does local collaboration contribute more to innovation performance than nonlocal collaboration? (3) What is the joint impact of local and nonlocal collaborations on innovation performance? We find that while local and nonlocal collaborations are statistically indistinguishable from each other in terms of their relative importance, they represent complementary spurs to innovation. Despite the unique research setting of Singapore as a city state, we argue that our findings may be generalizable to geographic systems in other parts of the world.

Keywords:

• innovation collaboration
• local and global
• innovation performance
• Singapore

Notes

¹ Given that geographic agglomeration of firms is observed in this small island nation, our empirical examination focuses on how firms' innovation performance is related to collaborative relationships across different spatial scales which, as correctly pointed out by an anonymous reviewer, are much narrower than the many benefits of an industrial cluster.

² Thorough and careful regulation in Singapore is figuratively described by the Dutch architect Koolhaas (1995, p. 1011) as follows, “it is managed by a regime that has excluded accident and randomness: even its nature is entirely remade. It is pure intention: if there is chaos, it is authored chaos; if it is ugly, it is designed ugliness; if it is absurd, it is willed absurdity.”

³ As pointed out by an anonymous reviewer, this restriction may bias our results. In particular, if some of the excluded firms attempted to innovate by collaborating with local partners but did not succeed in generating any innovation, omitting such observations would underestimate the hampering effect of local collaboration. A solution for future research is to collect data on both innovation-related collaboration and other types of collaboration (e.g., subcontracting or co-marketing alliances) such that spatial patterns of collaboration, innovation-related or not, could be examined for all firms. For the present research, we argue that the 3-year window in defining this minimum threshold may be long enough to minimize such bias in our results.

⁴ ASEAN is short for the Association of South East Asian Nations formed in 1967. It includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. This spatial scale was chosen due to its clear political, economic, and geographic boundaries.

⁵ Japan was singled out from the rest of Asia based on the flying geese model (e.g. Edgington & Hayter, 2000) in which direct investment and technology transfer from Japanese companies lead the technological development in Southeast Asia. Japan was the second-largest investor in Singapore's manufacturing sector, trialing the USA (Yeung et al., 2001). In our final sample of 143 firms, 71 were subsidiaries of foreign companies, among which 27 were from North America, 15 from Europe, 23 from Japan, and 6 from the rest of the world.