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The Paradoxes of Innovation Networks, Paper presentation at the International Conference on Networks, Learning and Entrepreneurship

The Paradoxes of Innovation Networks, Paper presentation at the International Conference on Networks, Learning and Entrepreneurship
SLNIW - Aberystwyth University
Wales UK

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Paradoxes of Innovation Networks Presentation Transcript

  • 1. The Paradoxes of Innovation Networks: an empirical examination of network internal dynamics and governance in an open innovation centre Pablo Munoz PhD Researcher , Newcastle University Business School Lucy Lu Academic Director MBA programme, Newcastle University Business School SLNIW Conference Aberystwyth University, Wales September 2010 Tuesday, 7 September 2010
  • 2. Introduction Several factors have started to change the traditional model of linear innovation into new and more interacting mechanisms: Business models - more open alternatives for conducting innovation activities. Changes in the processes by which firms explore and exploit opportunities, and create, diffuse and use valuable knowledge. Major implications for firms and the spatial organisation of innovation networks. This has led management teams of open innovation centres to reconsider the traditional support mechanisms for innovation and develop a new innovative structure, process and activities to facilitate the formation and function of efficient innovation networks and external knowledge relations. This study aims: At examining and analysing how the open-innovation centre functions by creating an environment that facilitates the formation, structuring and dynamics of innovation networks. At exploring the challenges facing the management teams as well as firms within the open innovation environment, for organising and performing innovation tasks for knowledge exchange. Tuesday, 7 September 2010
  • 3. Methodological approach A qualitative research strategy and a case study design were used. Located in Barcelona-Spain, the object of study selected was Creapolis, an open innovation centre managed by Esade Business School, place in which semi-structured interviews and participant observation were conducted. Interview guide - seven subject areas: Meanings Motivation and expectations Business models Innovation capacities Innovation processes Performance and outcomes Embeddedness and participation Networking and collaboration The analytical process of Framework was used for organising and analyse the collected data. Tuesday, 7 September 2010
  • 4. Literature review Inter-organisational networks: theoretical background Formation and structuring of networks Third coordination mechanism between hierarchies Resource based approach and markets Organisational learning Transaction Cost Economics Partner selection: embeddedness and mimetic Social Network Analysis isomorphism Actor Network Theory Over-emphasis on networks’ structural features Inter-organisational networks in open innovation environments: empirical context The increasing emphasis on collaboration has led traditional structures of knowledge production to transform into new forms of agglomeration. They are small concentrations of diverse actors wherein spinouts are not the result of a linear sequence of R&D activities, but of cross-sectoral collective efforts that focus on idea generation and on accelerating innovation processes throughout the network. These centres allow to participating firms benefit from different approaches to innovation and ways of doing business, get priority access to talent, and experiment and learn about open innovation. The adoption of open innovation models is having major implications for the spatial organisation of networks; it has required new mechanisms and an adapted setting for overcoming several paradoxes that are challenging the stability and performance of firms, management teams and the entire network. Network dynamics and governance The effect of networks: 8 dimensions Self-organisation: micro behaviour, multi-scale Embeddedness Relational capital effects, adaptation and new organisational forms. Social capital Politics Feedback loops (+/-) between hierarchical levels. Structural holes Trust Orchestration: knowledge mobility, innovation Diversity Proximity appropriability and dynamic stability, Tuesday, 7 September 2010
  • 5. Research findings Formation and structuring of open innovation networks: 9 drivers able of guiding firms’ agglomeration and network formation in an open innovation environment have been identified Positives - add dynamism to networks by increasing mismatches between cognitive rules, accelerating idea generation and creating knowledge spillovers. Drawbacks - major strategic imbalances, clashes between firms' agendas, and coordination problems in joint projects. Secondary effects on network's structural development: - Sectoral Isolation - Building of confidence in the integrity and reliability of the others Other issues: - Proximity, physical limits, and critical mass. - Identity and network inertia Tuesday, 7 September 2010
  • 6. Research findings Governance of network activity: set of complementary activities Socialisation Coordinate networking activities, internal social life and idea generation activities addressed to meet particular needs of each community of interest Mentoring Facilitate mentoring activities geared towards increasing projects' performance in the latter steps of the pipeline Training Coordinate training programmes for firms' staff in areas such as open innovation, organisational development, intellectual property and project management Knowledge Build knowledge bridges between academia, market trends and communities of interest Innovation model Facilitate a comprehensive innovation model for guiding innovation activities of firms Idea generation Stimulate firms to engage in the practice of open innovation, idea generation and business creation Although developed for improving the innovative capacity of the network, these activities have presented several difficulties for firms that have achieved a high level of innovative performance. Over-stimulation and state of paranoia Natural flows of information - overwhelmed Network stability - affected Tuesday, 7 September 2010
  • 7. Research findings Emerging network dynamics in an open innovation environment Governance: Focus on the creation and improvement of inter-organisational linkages based on corporate values, as well as on the detection and leverage of mutual interests. Real dynamics: Relies upon sets of complex ties at personal level that tend to produce, beyond corporate values, either commitment or apathy towards collaboration and networking. When it comes to analyse the shaping of internal dynamics, personal values and the character of inter-personal relations tend to exert more pressure on network's efficiency than mere corporate statements. Related issues: How to engage firms in collaborative activities and avoid the opportunistic behaviours that may emerge in these activities. Idea ownership Disagreements among participants about the meanings, boundaries and capabilities of the network (it affects the management of practical knowledge, learning and evolution) Tuesday, 7 September 2010
  • 8. Discussion: the paradoxes Tuesday, 7 September 2010
  • 9. Discussion: the paradoxes Paradox Refers to Benefits Drawbacks Disparate Effects of diversity on Increases the innovative capacity of Sectoral isolation agglomeration networks places Major strategic imbalances Positive impact on the degree of Clashes between firms' agendas novelty Coordination problems in joint projects Trust building Effect of diversity and the frequent Increases the innovative capacity of Opportunistic behaviours inflows and outflows of actors on places Introduces new complexities to the networks Provides new insights process of knowledge appropriability Reduces the effectiveness of collaborative action Governance of Effects of the activities geared Stimulates creativity Presents several constraints for network towards incrementing idea Facilitates exploration, idea implementing projects and for stimulation generation and radical innovation generation and radical innovations sustaining a dynamic stability within the network State of paranoia facilitates the between exploration and continuous development of new exploitation of opportunities projects and business Tuesday, 7 September 2010
  • 10. Discussion: the paradoxes Paradox Refers to Benefits Drawbacks Identity Effect of social capital and structural Strong ties: develops strong identity Strong ties: risks of over- building holes on the firms' performance and a sense of belonging among engagement, group thinking and Effect of the level of strength of ties network actors. Also beneficial for network inertia between actors on the exploiting and deepening the Weak ties: knowledge gaps, performance of networks existing knowledge base instability and risk of network Weak ties: Stimulates knowledge disintegration. exploration and innovation. Network Influence of the quantity, quality, Brings simplicity to the process Limits the network capacity of capacity nature and levels of personal of network structuring and the achieving a critical mass of talented, connections on shaping the boundaries definition motivated and creative people processes of network formation and structuring Dual effects of close proximity of actors on the performance of a physically limited network Communitarian Influence of the quantity, quality, Improves cohesiveness Disagreements among participants values nature and levels of personal Develops trust about meanings, boundaries and connections on shaping the capabilities of the network processes of network formation Facilitates effective communication, knowledge sharing and interactive Tends to produce, beyond and structuring corporate values, either learning Relevance of the character of commitment or apathy towards inter-personal relations beyond collaboration and networking corporate statements Tuesday, 7 September 2010
  • 11. Conclusion: recommendations These paradoxes not only illustrate the complexities of these new forms of innovation networks, but also present immediate challenges for improving the formation, structuring and dynamics of networks that operate within open innovation centres. Accordingly, seven mechanisms are proposed for enhancing the current state of development. Mechanism 1 Rethink the role of the management team as a hub aimed at creating value for the network and extract value from it. Mechanism 2 Configure a comprehensive analytical approach comprising a broader range of social dimensions Mechanism 3 Establish a multi-dimensional process of trust building Mechanism 4 Establish the multi-dimensional nature of diversity as a contextual coordination mechanism Mechanism 5 Facilitate a high density of interactions Mechanism 6 Consider a systemic use of the five dimensions of proximity Mechanism 7 Facilitate the configuration of internal networks at multiple levels Tuesday, 7 September 2010
  • 12. Implications and concluding remarks This first approach to the emergence of network paradoxes in open innovation environments and the proposed mechanisms present several implications as well as introduce new elements to be considered in further research. Introduces new complexities to the understanding of innovation networks that defy the traditional literature as it shows the difficulties and paradoxes of developing effective networks in open innovation environments. Underlines the importance of recognising the drawbacks of utilising simplistic analytical frameworks and emphasises the need of developing a contingency approach able of combining analytical tools from both sociological and economic perspectives, as well as stresses the importance of using this approach in a reflexive manner depending on the context where networking takes place. Allows rethinking current strategies and mechanisms aimed at fostering innovation at wider aggregation levels. Customised tools as the ones proposed above, geared at creating and facilitating effective networks in open innovation environments, not only represent a contribution for network actors, but also have implications for policy-makers as they can now incorporate synergistically new structures for knowledge creation into the regional innovation milieu. Tuesday, 7 September 2010
  • 13. The Paradoxes of Innovation Networks: an empirical examination of network internal dynamics and governance in an open innovation centre Pablo Munoz PhD Researcher , Newcastle University Business School Lucy Lu Academic Director MBA programme, Newcastle University Business School SLNIW Conference Aberystwyth University, Wales September 2010 Tuesday, 7 September 2010