Innovative Activity in SMEs and Rural Economic Development: Some Evidence from England

Recent writings on the factors influencing the competitiveness of regional and local economies have emphasized the importance of innovation in SMEs. This paper discusses the findings of a study of the innovation process in a sample of SMEs located in rural environments. Adopting a broad, evolutionary view of the innovation process, the study highlights important sectoral variations using a multidimensional index of innovation. The way in which innovation is achieved is found to be shaped by various aspects of the rural environment, but relatively few firms are constrained by their rural location. Nor does the lack of local networking opportunities appear to hold back innovation in the more active SMEs. In conclusion, the most innovative firms are shown to make an important contribution to rural economies in terms of external income generation and employment generation.     

Wishful thinking? Towards a more realistic role for universities in regional innovation policy

ABSTRACT

The past 30 years has seen an escalating interest in the potential role of universities in contributing to their regional economies, reflected in the increasing trend for regional innovation strategies to ascribe a central role for universities, particularly in peripheral, institutionally thin places. The global economic crisis and subsequent austerity measures implemented in many developed economies have put further pressure on universities from national and regional policymakers to become more explicitly involved in contributing to their local economies in order to justify their public funding. This paper will draw on the academic literature to consider how justified this focus is by questioning whether universities are willing or even able to play the roles expected of them in contributing to regional innovation. It will critique an approach to policymaking that often views universities as homogenous actors in the regional innovation system and places an over reliance on imitating success stories from other places without sufficient consideration of the specificities of local conditions. It will argue for a more realistic and nuanced approach to involving universities in regional innovation policy, concluding with key insights for both universities and policymakers.     

On entrepreneur ship,region and the constitution of scale and scope economies

This paper proposes a framework of analysis in which: (1) the constitution of new sources of economies of scale or scope is supported by systemic entrepreneurship; (2) the realization of such economies by incremental entrepreneurship takes the form of external economies, or alternatively of internal economies, together with the prevalence of different combinations of organizations, technologies and regional characters; and (3) the manifestation in the form of external economies is sustained by market rules and focused public intervention, which complement the working of markets, and which can be embedded in regional (or local) relations. Further and more specific conclusions will be referred to in the case of external economies within production systems which are assuming or are reproducing the techno‐organizational characters of flexible specialization. The standard case of the industrial district with final markets largely characterized by differentiated and variable markets falls within such application.     

Industrial Districts,Innovation and I-district Effect: Territory or Industrial Specialization?

The I-district effect hypothesis establishes the existence of highly intense innovation in Marshallian industrial districts due to the presence of external localization economies. However, industrial districts are characterized by specific manufacturing specializations in such a way that this effect could be due to these dominant specializations. The objective of this research is to test whether the effect is explained by the conditions of the territory or by the industrial specialization and to provide additional evidence of the existence and causes of the highly intense innovation in industrial districts (I-district effect). The estimates for Spain of a fixed-effects model interacting territory and industry suggest that the high innovative performance of industrial districts is maintained across sectors, whereas the industrial specialization behaves differently depending on the type of the local production system in which it is placed. The I-district effect is related to the conditions of the territory more than to the industrial specialization. The territory is a key variable in explaining the processes of innovation and should be considered a basic dimension in the design of innovation and industrial policies.     

Italian Industrial Districts: An Industrial Economics Interpretation

The Italian debate on industrial districts suggests that local development can be based on small and medium-sized firms, provided they work in teams and are embedded in a local system of social relations. If the availability of local public goods complements the private supply of local specialized services and goods, Marshallian external economies are engendered. When inner social and economic relations boost the supply of local public goods, and are reproduced by the consistent economic behaviour of local (economic and political) agents, they become local factors of economic development, or, in other words, the district's social capital. These propositions are considered within a three-layered framework comprising structure, conduct and performance. The relations among these levels allow joint consideration of three different processes of economic selection: competitive, strategic, evolutionary. This complexity is necessary if the conditions that foster significant Marshallian external economies are to be represented correctly.     

Chinese manufacturing entrepreneurship capital: evidence from Italian industrial districts

The purpose of this paper is to obtain a better understanding of the presence of Chinese manufacturing entrepreneurship in industrial districts compared to other Italian local economies. Statistical data are used to uncover where Chinese manufacturing entrepreneurs localize their businesses and to what extent this localization is an innovation within the geographical pattern of industrial districts. Data on Chinese manufacturing micro-enterprises (i.e. with less than 10 persons employed) started up in years 2005–2007 and 2008–2010 are cross-tabulated by industrial districts and other local economies to investigate their change over time. The empirical findings show a dominance of industrial districts: those located in Tuscany are on top and Prato district ranks first.     

TELECOMMUNICATION EXTERNAL ECONOMIES,CITY SIZE AND OPTIMAL PRICING FOR TELECOMMUNICATIONS*

ABSTRACT. In this paper I make use of a city systems model to examine how telecommunications may affect cities in urban systems. The model offers an explanation for the observation that the share of employment in the communication-intensive producer-service sector increases with city size in the U.S. I suggest that external scale economies associated with metropolitan employment size, telecommunication network size and total number of intrametropolitan telecommunication contacts are possible explanations for this observation. I go on to suggest that the presence of telecommunication size and contact level external scale economies at the metropolitan level affects the optimal price that should be charged for local telecommunication services.     

Innovating in Cluster/Cluster as Innovation: The Case of the Biotechvalley Cluster Initiative

It has been noted that innovation seems to take place to a higher degree in clusters than elsewhere and we have lately seen a worldwide wave of emerging cluster initiatives and similar innovation policy projects. Some of these are realistic efforts based on existing regional strengths and partly existing cluster structures. Most, however, are grasping at straws. The latter is especially true when it comes to technologies such as IT and biotech. We could subsequently add a new label—“pathetic clusters”—to the already existing list of embryonic, emerging, world-class or stagnating clusters. But what do we make of such “pathetic clusters” (are they really pathetic)? Although economic geographers often tend to explain innovation (competitiveness) by looking at cluster dynamics, in such accounts, the cluster concept itself can actually function as an innovation, imposing similar effects on the economy as more familiar types of innovation would, i.e. by creating a local competitive edge. It is reasonable to believe that if “pathetic clusters” play important roles in regional economies, then they do so in the form of social and organizational innovations rather than as Porterian drivers of innovation and industrial dynamics on a large scale. This function of the cluster concept—as a local innovation—is the focus of the paper at hand.     

全球—地方视角下西安市软件产业集群的创新效应研究

全球—地方关系为产业创新研究提供了新的视角。本文基于全球（通道）—本地（蜂鸣）关系视角构建了软件产业集群创新效应研究的理论框架。以西安市软件产业集群为例,采用Stata13定量分析不同尺度创新合作的创新效应及其影响因素。研究发现,本地和国际创新合作均对集群创新具有积极的影响,且后者比前者的创新效应更强,说明搭建外部通道对集群创新的必要性;本地与国际创新合作交互对不同规模的软件企业产生的创新效应不同,对小型软件企业存在减法效应,对中型软件企业存在加法效应,对大型软件企业具有乘法效应。建立领先软件企业带动的开放创新系统,是西安市软件产业集群提升创新效应的有效路径。     

Capturing gains by relocating global production networks: the rise of Chongqing’s notebook computer industry, 2008–2014

In 2008 a new notebook manufacturing cluster was established in Chongqing in western China. By 2013 it accounted for some 25% of world output by volume. Chongqing’s ability to attract this manufacturing supply chain was driven by several factors that permitted strategic coupling: the existence of complex networks of cooperation and economies external to the firm but internal to contemporary global production networks; changed conditions in southeast and east China; and the creation by Chongqing Municipal People’s Government with central state support of hard and soft infrastructures and externalities that drove down logistic and production costs and permitted constant product innovation.     

权力集中化、生产片断化与全球价值链下本土产业的升级

全球领先企业的权力集中化和生产的片断化导致价值分配的非均衡,并进一步加剧了全球生产网络中权力结构的不对称。本文提出全球价值链上的权力是一种建立在战略资源基础上的不对称的话语权,并归纳了八种基本的市场权力形式。通过对全球十大工业制成品及服务业的市场份额分析,发现技术能力和品牌能力是全球领先企业市场权力集中的主要根源,也是决定全球价值链上价值分配的决定性因素。嵌入全球价值链有利于发展中国家的本土企业迅速提高生产能力、接近全球市场和技术通道,但是从生产能力到创新能力的升级过程并非自动发生;全球价值链生产片断化带来创新过程的垂直分离和重新整合,发展中国家产业升级的关键在于本土企业的吸收能力和学习速度。     

The Role of Interactive Learning to Close the “Innovation Gap” in SME-Based Local Economies: A Furniture Cluster in the Basque Country and its Key Policy Implications

This paper identifies an “innovation gap” in the (in)efficient relation between innovation structures and production systems in SME-based economies and, by elucidating an implicit aspect of key theoretical contributions from Lundvall and Cooke, among others, sets the basis for a policy focus that may help reducing those margins of inefficiency. In this work, we identify three interdependent drivers of innovation: the “critical mass” of firms in a specific geographical location; the formation of “organizations” devoted to the creation and diffusion of knowledge and innovations; the ignition of “learning processes” within the production system that help catalyse significant innovations within the local economy. We suggest that the importance of processes of codified knowledge flows needs to be complemented by interactive flows of tacit knowledge that help overcoming the “innovation gap” that often exists between firms and knowledge institutions. Since this gap represents the inefficiency of the innovation structures, we suggest that it should be targeted by policy-makers and business associations as a central issue for innovation promotion through actions that intensify interactions and learning processes through bottom-up initiatives. These elements are analysed in a furniture cluster in the Basque Country and are highlighted on the basis of successful micro-territorial experiences.     

Canada's Ocean Supercluster initiative: A national policy in regional clothing?

Since the late 1980s, there has been no explicit regional policy in Canada. Indirectly, though, equalization payments, industrial policies, as well as regional agencies encouraging the adoption of federal industrial and innovation policies, impact regional economies. In 2017, the federal government appeared to alter its approach: the Supercluster initiative was announced, drawing upon the idea that localized networks of interrelated firms can generate innovation and local development. In this paper, we discuss the mechanisms through which spatially focused industrial innovation policy can lead to regional development. We then focus on Canada's Ocean Supercluster initiative. The question we address is as follows: to what extent can this initiative (and, more widely, Canada's Supercluster policy) be understood as a regional development strategy driven by a coherent rationale for regional intervention? Apart from the fact that each Supercluster focuses on a pre-existing core of firms located within a region, there is little evidence that the Supercluster initiative has regional development objectives or impacts.     

ABSORPTIVE CAPACITY,KNOWLEDGE FLOWS,AND INNOVATION IN U.S. METROPOLITAN AREAS

High growth and progressive regions possess a culture that promotes innovation. Innovation depends on a region's ability to use its own existing knowledge and knowledge generated elsewhere. This paper demonstrates the importance of the ability to absorb external knowledge in explaining innovation productivity for 106 U.S. metropolitan areas. Using a spatial interaction model of patent citation flows with origin and destination dependence, the destination fixed‐effects coefficients provides a measure of a region's absorptive capacity. We identify local conditions that shape a region's absorptive capacity and demonstrate it has a positive and significant impact on innovation productivity.     

Local Labour Market Diversity and Business Innovation: Evidence from Irish Manufacturing Businesses

This paper estimates the effect of diversity within local labour markets on business-level innovation. Using survey data and Irish census data, the paper explores whether the diversity of human capital at county level is associated with higher innovation output. Diversity in age, nationality and educational attainment is measured using an index of heterogeneity and its effect on business innovation is estimated using an innovation production function approach. It is found that diversity in nationality and educational attainment is positively associated with the probability of a business product innovating. The findings also suggest that greater external labour market diversity and greater levels of internal third-level education may be substitutes. Where a business is in a diverse location, it may not require higher levels of educational attainment among its workforce to source knowledge for product innovation.     

Networking and learning for tourism innovation: evidence from the Western Cape

ABSTRACT

This paper examines the nature of networking and learning by tourism firms in relation to accessing knowledge for innovation. In particular, the nature of tourism learning and networking, geography of networking linkages, and systemic characteristics of relationships between tourism firms, government agencies, higher education institutions, and other organisations in the Western Cape tourism system are examined. The analysis draws on 182 tourism firm, tourism system, and contextual interviews. This investigation demonstrates that even though tourism firms mostly use internal resources for innovation, external, non-local knowledge is significant for enhancing novel innovation. It is disclosed that whilst local network linkages are dense, loose, and of importance for business and marketing purposes, extra-regional network relationships are imperative for learning in relation to innovation. As further observed, network linkages between local and regional actors for supporting tourism innovation in the Western Cape are generally weak which points to the underdevelopment of local and regional innovation networks or systems. The paper provides planning recommendations for enhancing the competitiveness of tourism firms towards fostering development and growth in the regional tourism economy. Specifically, support for stimulating learning networks as well as strengthening systemic relationships in the Western Cape tourism system are recommended. It is underscored that strategic relationships with non-local partners need to be nurtured towards fostering tourism innovation and enhancing regional competitiveness.     

From toys to automobiles: foreign investment,firm heterogeneity and intermediaries in a Portuguese industry

In the literature on territorial innovation systems there is a constant tension between the effect of endogenous and exogenous factors and their relative importance. In order to address this tension several approaches have sought to conceptualize the relational and multi-scalar dimension of innovation and to explain how external knowledge and economic flows in conjunction with regional contexts combine to produce regional growth, stagnation or decline. This paper will contribute to this debate, while also highlighting that even at the local level there is substantial heterogeneity between firms. It will also shed light on the role of intermediary organizations that can help address information and power asymmetries between multinational corporations and less competitive local firms. Empirically it will draw on the case study of the Portuguese moulds industry, which has successfully adapted to shifts in the global economy by drawing on local resources while also remaining integrated into global value chains.     

New regionalism in Turkey: questioning the ‘new’ and the ‘regional’

Turkey’s regional policies are inspired by the new regionalism theory. During past two decades, key concepts of new regionalism, including knowledge economies, specialization, networked cities and innovation, have been incorporated in policy documents. At the same time, Turkey comes from a strong central state tradition that controls local and regional development. At first insight, new regionalism and strong central state control do not fit in the same frame. This research analyses the trajectory of regional policies in Turkey with the aim of explaining how these seemingly incompatible policies can coexist. It argues that regional policies developed at the central state level utilized new regionalism as a part of the strategy to maintain power in the course of transformation of the nation state.     

Designing a New Civic Economy? On the Emergence and Contradictions of Participatory Experimental Urbanism

Can we remake local economies from scratch – not through political struggle but by design – to solve wicked problems and transform urban governance? Such questions are raised by an emergent trend within urban experimentation that emphasises participation and commoning in designing peer-to-peer provisioning systems through a platform logic. This article deconstructs the discourses animating what we term “participatory experimental urbanism” and reflects on what this might mean for local state restructuring in times of neoliberal austerity. By following its policies and prototypes as they move and mutate across the London Boroughs of Lambeth and Barking & Dagenham, we examine two exemplary initiatives, Open Works and Participatory City, tracing their beginnings in Lambeth's “cooperative council” model and their ongoing assembling into novel public-common-philanthropic partnerships. Foregrounding the contradictions within this latest turn towards urban governance-beyond-the-state, we draw out the implications for the future of social innovation, design-thinking, and the experimental city.     

Rural regeneration strategies for declining regions: trade-off between novelty and practicability

ABSTRACT

Innovation comprises both novelty and practicability. These two dimensions of innovation correlate partly negatively in our analysis of survey data about planning processes in declining rural districts. As argued in the literature, declining regions need innovative concepts beyond traditional counteracting strategies to ‘shrink smart’. Competitions are suggested as feasible-to-initiate innovative local concepts by the state. The German Federal Ministry of Food and Agriculture invited 39 particularly affected rural districts to participate in such a competition among the best concepts. We address the questions of how the districts dealt with the requirements for novelty and practicability in their concepts and how the rules of competitive bidding procedures influence those concepts. Answering these questions, we conducted a survey and statistically tested hypotheses deduced from governance and innovation theory. Moreover, we analysed the bidding documents. The results show that most districts came up with hardly novel and only partly practicable concepts because the organization of the competition, and local bargaining processes impede innovation. Furthermore, the ministry’s requirements for the competition overburdened local actors with a lack of resources in declining regions. As a policy implication, we propose to integrate external experts in local networks and to accompany declining regions over a longer time instead of short-term competitions and projects.