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  1. 1. Chapter 3 INNOVATION-RELATED NETWORKS AND TECHNOLOGY POLICYMAKINGABSTRACT Formal and informal co-operation relating to the production and the diffusion of scientific and technological knowledge and the creationof technology has become a widespread phenomenon within OECD economies. The need for co-operation stems from particular features oftechnical knowledge (as distinct from information) in particular its "tacit" and specific content. The marked increase in co-operation stemsfrom the rising cost of R&D as well as the ongoing trend towards the fusion of disciplines in previously separate fields. Informal networks, between individual researchers and between laboratories situated in different institutional ratings (universities,government laboratories, industrial associative laboratories and firms) and/or in different countries are as old as organised science andtechnology. During the last ten to fifteen years, university-industry linkages have increased and become more formalized. They permit adivision of work among scientists in very different institutional contexts. Networks among engineers in industrial technology are moreselective and closed than those established in basic science, because of the tacit nature of much of the knowledge exchanged. All networks,however, require reciprocity and trust. The growth of international and domestic inter-firm agreements, which generally build on these older networks, represents a significantand novel development of the 1980’ s. Firms pursue co-operative agreements in order to gain rapid access to new technologies or newmarkets, to benefit from economies of scale in joint R&D and production, to tap into external resources of know-how and to share risks. Thegoal of agreements is to organise collaboration without destroying the individuality of co-operating partners. It is assumed that parties aremutually dependent upon resources controlled by one another and that both can reap gains by pooling resources. User-producer co-operationrepresents a growing form of inter-firm co-operation. Economic analysis generally considers that these agreements represent a type of organisation "lying between" market transactions and"hierarchies". This chapter argues that they represent a type of arrangement with specific features, which can be analised in terms oftransaction cost theory but must he treated as a distinctive way of organising certain types of economic relationships, notably those bearingon technology. Networks are an important component of national systems of innovation. An important function of science and technology policy is tostrengthen existing innovation-related networks and to help build networks in areas where they are lacking. While, many networks do notnecessarily coincide with the boundaries of the national economies, the use of innovation-related linkages as a policy instrument can onlyoccur on the basis of a proper identification of such linkages and their categorisation. Consequently, a possible approach to the morphology ofnetworks is sketched out to this chapter. 67
  2. 2. INTRODUCTION This chapter takes the analysis developed in Chapter 2 a step formed. In the case of telecommunications, for example, the needfurther. It moves from the analytical field of unforeseen R&D for co-operation and co-ordination stems from the particularspillovers and related externalities, in environments shaped by requirements of complex sophisticated systems characterised bycompetition and the overall level of technological advance, to the area technical interrelatedness, systemic scale economics and the quasi-of consciously formed linkages aimed at reaping returns to R&D irreversibility of large investments2. In the case of R&D andcollectively through co-operation among firms. Once inter-firm innovation, which is the focus of this chapter, the need for co-agreements and network relationships are introduced into the analysis operation stems from the particular features of scientific andof innovation, the traditional economic distinction between innovation technical "information" and the strong ongoing trend towards theand imitation /diffusion becomes even more arbitrary. fusion of disciplines and previously separate technical fields. Extensive use of the terms "co-operation" and "networking In a broad sense, actions aimed at favouring the building ormay obviously owe something to fashion, as does "globalisation consolidation of innovation-related linkages and networks have of(discussed in Chapter 10). The position taken here, however, is that course always been an implicit component of national science andcommon use of these terms reflects an initial and still imperfect technology policies Today, it seems possible to approach thisrecognition of two major developments. dimension of policy making more explicitly. As a fairly central ele- ment of government innovation policy, it could, for instance, help The first concerns the rapid and almost generalised diffusion of improve decision-making in regard to the direction and level ofnew information and communication technologies and the key role public financial support for science and technology. The use ofnow played by telecommunication networks in providing essential innovation-related linkages as a policy instrument can only occur,economic inputs. The second is the fact that new technologies are less however, on the basis of a systematic approach, founded on aand less the result of isolated efforts by the lone inventor or the proper identification of these linkages and a categorisation of theindividual firm. They are increasingly created, developed, brought to type discussed in Section 3.market and subsequently diffused through complex mechanisms builton inter-organisational relationships and linkages. These linkages In a highly internationalised global economy (see Chapter 10)possess a number of features which make the "network node" (Imai built on open national economies and systems of innovation, a partand Itami, 1984), a distinct form of inter-firm organisation that of the "networking" arising from inter-firm co-operation willoperates alongside and in combination with the two forms previously necessarily straddle oceans and national frontiers. However, it mayrecognised by economic theory, namely markets and "hierarchies" (i.e. still be important to view geographically narrower forms alarge centralised forms of corporate organisation built on extensive innovation-related networks as one of the factors contributing tovertical and horizontal integration through investments and mergers)1. dynamic learning processes and cumulative "virtuous circles" of knowledge accumulation at local, regional and national levels. This The exact content of a "network" will necessarily differ chapter should therefore be related to Chapter 11 on technology andaccording to circumstances and its structure will be shaped by the competitiveness; measures aimed at strengthening innovation-objectives for which linkages are related networks should be viewed as one component of policies for competitiveness. 68
  3. 3. 1. SECTORAL EVIDENCE OF INNOVATION-RELATED NETWORK LINKAGES nical fields relevant to corporate growth” and “totally new The surge of inter-firm agreements and other wider forms of requirements for significant technical advances” (Fusfeld, 1986).innovation-related networks must be set in the context of These pressures can be partly met by an increase of R&D withincontemporary trends in science and technology. The overall picture is corporate structures, both nationally and internationally, or by theone where synergies and cross-fertilisation, both between scientific establishment of joint-venture corporations solely dedicated todisciplines and between scientific and technological advances, have R&D in co-operation with other firms. Often, they will require theplayed since the late 1970s an increasingly important role, notably external acquisition of knowledge, know-how in and skills locatedthrough continual advances in computing technologies. The massive in other organisations, such as universities (when the knowledge isentry of computing into instrumentation has further strengthened the still close to basic research) or other firms.role of the latter. The extension of the systemic features oftechnologies to many areas is a necessary and inevitable outcome of However, the acquisition of externally developed knowledgethese developments. Alongside these processes and as an indication of is not a simple process. This is due in particular to the role of tacittheir pressure on firms, there has been a general tendency (noted in and specific knowledge (see Box 16).Chapter 1) towards a significant increase in R&D costs and outlays. Dosi (1988, p.1130) has suggested that “the distinction In combination, these developments in science and technology between technology and information – with the latter being only ahave created a "capability squeeze”, marked by “the increase in the subset of the former-entails important analytical consequences fornumber of tech- the theory of production”. This is the analytical context, as Foray and Box 16. The transmission of codified and uncodified knowledge Recognition of the importance of linkages and relationships in everyday innovation processes has been coupled with the development by scholars and experts of a vital analytical distinction between knowledge and information. Recent understanding of the nature of the knowledge associated with engineering and production processes is at the heart of this conceptual advance (see Nelson and Rosenberg, 1990): technology invariably combines codified information drawn from previous experience and formal scientific activity with uncodified knowledge, which is industry-specific, or even firm-specific, and possesses some degree of tacitness. In science-based industries and, to an even higher degree, in all other industrial sectors, codified scientific and technical knowledge is complementarv to more tacit forms of knowledge generated within firms. Part of this knowledge will in time become codified within engineering disciplines. Other parts will always remain firm-specific. In each technology there are elements of tacit and specific knowledge that are not and cannot be put in "blueprint" form, and cannot, therefore, be entirely diffused either in the forum of public or proprietary information. On the basis of earlier insights by Polanyi (1967), Dosi (1988, p.1126) has suggested that " tacitness refers to those elements of knowledge, insight and so on, that individuals have which are ill-defined, uncodified and unpublished, which they themselves cannot fully express arid which differ from person to person. but which may to some significant degree be shared by collaborators and colleagues who have a common experience" (emphasis added). This kind of knowledge must he carefully distinguished from "information" in the usual sense. A recent .Japanese study on svstemic innovation and cross-border networks in VCRs by Imai and Baba (1991, p. 3) considers that a clear distinction should he made between the "information on the basis of which decisions are taken by firms (e.g. demand, markets, exchange rates, interest rates. etc.) and the specific knowledge and capabilities which allow the solution of technological and production related problems". "Information" can often fairly easily take the form of algorithms. "Knowledge" will often require more complex mechanisms of communication and transfer. II can more easily he "appropriated" privately. It requires special learning processes and can only be shared, communicated or transferred through network types of relationships. 69
  4. 4. Mowery (1990) also argue, within which inter-firm agreements tution, including its reputation, its recognition by peerand co-operation must be set. judgement and the strength and reputation of the domestic and international networks to which it belongs. These networks include The role played by relational and network-like forms of what the study calls the "extended laboratory"4 as well as the widerorganisational practices, in particular with respect to the production international network of each scientific or sub-discipline. This latterand exchange of technology, must not, however, be restricted to network intervenes in at least two ways first, by the assistance it canstudies of corporations and industry (Powell, 1990). Because offer the individual laboratory by ensuring that "spokesperson" orcontemporary networking by firms generally builds on older types of "intermediaries" obtain the best possible reception within the widernetwork relations among scientists and engineers, analysis must take scientific community; second, by the assumption outsiders caninto account earlier findings on the formal and informal patterns of legitimately make that the laboratory has used at least part of thecommunication and exchange of knowledge in the production of scientific expert. rise available within the network to develop andscientific and technical knowledge. It must also take into account verify the new fact or theory.research of the 1980s on university-industry relations. Networks also exist among scientists and engineers engaged Networking among scientists and engineers in applied R&D in government laboratories and in industrial firms. Informal networks, between individual researchers and between Available case studies have shown that the networks built in theselaboratories situated in different institutional settings (universities, areas are much more selective and closed than those established ingovernment laboratories, industrial associative laboratories and firms) basic science. This is because much of the knowledge exchangedand/or in different countries, are as old as organised science and and transferred is know-how (the accumulated practical skill whichtechnology. They are inherent to the existence of "communities" of allows one to execute a task smoothly and efficiently) or againscientists and of engineers belonging to the same discipline or industry "tacit", uncodified (and often uncodifiable) knowledge, e.g.and working in the same or related fields. Over the past years, there practical craft details never formalised in scientific publications.has been a significant increase in the explicit recognition of their Such knowledge is implicitly or explicitly proprietary; itsimportance for technology creation. possession represents a form of "competitive advantage" for firms and even for public sector laboratories which may be "competing" In a locus classicus on the structure of networking within for government and industrial contracts. Informal trading of know-scientific communities, Crane (1972) established, on the basis of how, "trade secrets" and tacit knowledge involving networkempirical research, that "science grows as a result of the diffusion of relationships occurs extensively and has received increasingideas that are transmitted in part by means of personal influence"3. attention. In a case study of the network set up for the high pressureScientists themselves readily acknowledged the importance of gas laser, the author found that data was revealed to other laborato-personal links for their work. The study found that while there were ries on a highly selective basis. He noted that individuals andvarious sorts of interactions (informal discussion of research, laboratories made conscious and careful choices as to what know-published collaborations, relationships with teachers, influence of col- how would be revealed to what recipient and that "nearly everyleagues on problem choice), investigation revealed interesting patterns Laboratory expressed a preference for giving information only toof strengths and directions of structural links. On the basis of a those who had something to return" (Collins, 1974, p. 59). Similarquestionnaire in which scientists were asked to name contacts, small behaviour has subsequently been observed and studied amongnumbers of tightly-knit groups of scientists engaged in close development and production engineers working in rival firms ininteraction were identified, along with weaker links between the metallurgy (von Hippel, 1987; and Schrader, 1991). The sharing ofstrong clusters. The most productive scientists in each group were tacit knowledge was seen to follow fairly identifiable patterns basedtypically in touch with each other. on the assurance that reciprocity and fair albeit "non-traded" The study brought convincing evidence of a position held exchange of knowledge will occur among participants. Theseimplicitly by a large part of the scientific community, namely that sociological observations are important. They represent a "hidden"these close-knit structures, completed by a wider network of the most but often vital dimension of technology-sharing agreementsactive and productive laboratories, were essential for the development between firms. Selection of potential partners in co-operativeof a scientific field. Recent work on similar issues co-ordinated by ventures is based on similar considerations. ICallon (1989) has suggested that initially, at least, a new scientific Such aspects of reciprocity, obligation and trust founded on"fact" will often only be valued in terms of the "status" of the reputation shaped by peer judgement correspond to the wideroriginating insti- findings of the theory of co-opera- 70
  5. 5. Box 17. Informal know-how trading between block and decisive ingredient for the establishment and. successful engineers in rival firms operation of R&D related co-operation and communication between universities and industry. The 1984 OECD study on industry and Von Hippel (1987, p. 292) has observed the university relationships observed that "collaboration and communi- following type of behaviour: cation between industry and the academic community usually begin • “Network formation begins when, at conferences and elsewhere, an engineer makes private very informally and are characterised by person-to-person contacts. judgements as to the areas of expertises and abilities From this base, they may gradually become more and more formal, of those he meets, and builds his personal informal leading eventually to contracts and/or other forms of linkages." list of possibly expert contacts. Later, when (OECD, 1984, p. 19). The study cites OECD countries as the most ‘Engineer A’ encounters a product or process outstanding example among OECD countries of the strength and development problem he finds difficult, he activates efficiency of informal relations within a wide community of his network by calling ‘Engineer B’, an scientists and engineers working in different environments. approprietaly knowledgeable contact who works for directly competing (or no-competing) firm, for In some OECD countries, informal university/industry advice. • B makes a judgement as to the competitive value relations have operated more or less extensively and effectively for of the information A is requesting. If it seems to him a long time, over the last ten to fifteen years, they have been vital to his own firm’s competitive position, he will formalised and given greater institutional visibility. In others, where not provide it. However, if it seems useful but not they were weak, policies have had to be devised by governments in crucial- and if A seems to be a potentially useful and order to help to build them up (see Section 4). Studies of university- appropriately knowledgeable expert who may be of industry linkages show that, independently of their origin, i) both future value to B – B will answer his request as well as he can and/or refer him to other experts of his the extent and the nature of university/industry relations depend acquaintance. B may go to considerable lengths to upon sector and firm size, and ii) the objectives of such help A. relationships - the function which academic institutions can perform • At the same time, A realises that in asking for and (more or less effectively) for industry - similarly vary. accepting the help, he is incurring an obligation to provide similar help to B – or another referred by B Large firms operating in high technologies almost invariably – at some future date. No explicit accounting of possess the widest and most efficiently managed network of favours given and received is kept in instances studied to date, but the obligation to return a favour linkages with the university systems, both at home and abroad. seems strongly felt by recipients.” While firms of this kind generally have significant internal R&D, university research groups are considered valuable both as an extension of this research capacity and as a kind of antenna - commonly referred to by industrialists as a "window on research". When a common research interest exists, it becomes a central cog intion developed by the sociology of organisations over the 1970s and an informal network for sharing scientific information. Firms1990s. Axelrod (1984) has summarised the most significant recognise that because senior university researchers belong to well-consequences .of repeated interaction among individuals. When there developed scientific networks, universities have world-wideis a high probability of future association, individuals are not only contacts and may have easier access to emerging ideas, especiallymore likely to co-operate with others, they are also increasingly from abroad.willing to punish "opportunism" (see note 1) or the refusal to co-operate. When repeated exchanges occur, quality becomes more Firms enjoying good links with academic institutions perceiveimportant than quantity. The reputation of participants is the most that they must also keep their partners in touch with their ownvisible signal of their reliability and bulks large in many network-like research activities and try to develop a true complementarity ofwork settings. work. Successful industrial links with universities are based upon a sense of "give and take among equals", a relationship founded on person-to-person familiarity and confidence. Consequently,From informal to formal networks: university-industry research scientists employed by large firms are encouraged to playrelations in the 1980s an active role in the scientific community, international as well as national, through presenting papers, publication and other contacts. The informal networks among scientists and/or engineers just Firms recognise that although in some fields they may be moredescribed represent a major building- advanced than university laboratories, 71
  6. 6. university scientists may have the opportunity of inves- Inter -firm tech technology-related agreements as networks tigating questions of interest in much greater depth than is possible in their own laboratories. A real division of The expressions -technical networks" and "technological labour often takes place as a result of university/industry networking" (see Fusfeld, 1990 and 1986) have increasingly been collaboration, leading to joint publications. employed in discussions focused on technology-related agreements set up between enterprises. Use of the word "network" in this During the 1980s, the creation of more effective context is not devoid of ambiguity. Inter-firm agreements andrelationships between universities and small and medium- alliances must also be analysed as instruments of corporatesized firms (SMEs) became a central focus of policy in competition strategies, and some tend towards collusion in the formmany countries. Interest has been attached in some of an implicit protection of key technology through co-operationcountries to the fostering of small high technology firms in among a few players. A number of authors argue that this canadvanced sectors as "spin-offs" from university distort competition more significantly than is olden recognised (e.g.laboratories, following the highly-publicised United States’ Porter and Fuller, 1986; Contractor and Lorange, 1985; andWest Coast examples of Cites and Genentech (Peters, Dunning, 1988b). This is particularly true1989). Others have not considered this approach advisable.In all countries, however, hopes have been pinned onestablishing industry-university linkages for smaller firms,as a steams to produce high value-added goods (andservices) in new research-intensive sectors. In almost everyOECD country - including the United States, where theNational Science Foundation has actively promoteduniversity-industry programmes - a range of institutionshas been set up to promote university-enterprise relations,generally in close conjunction with national science andtechnology policies. Increasing importance is also beingattached to specialist institutions at the regional or local Box 18. Factors explaining the preferencelevel (for example, the Centre Québecois de Valorisation for agreements by firmsde la Biomasse in Canada), to private or public foundations(such as the Research and Development Corporation in The opportunities created by agreements are differentJapan and the Technology Foundation in the Netherlands), from, and in given circumstances superior to, those associatedand, more directly, to institutions such as the university- with the "internalisation" of activities through domesticindustry foundations in Spain. vertical or horizontal integration or foreign direct investment. In the face of financial and economic uncertainty and turbu- The topic has ranked high on the science and lence in the world economy and of parallel rapid and radicaltechnology policy agenda of the OECD. Recent work technological change, the new forms of agreements offershows that after an initial phase marked by some diffi- firms a way of ensuring, in a wide variety of situations, a high degree of flexibility in their operations. When technology isculties, firms are quickly learning to make effective use of moving rapidly, the flexible and risk sharing (or indeed riskthe strengths of universities, especially in fundamental displacing) features of inter-firm agreements offer firms inresearch and advanced training, thereby reducing the particular a wide range of possibilities for acquiring keyscope for possible strategy conflicts, and that universities, scientific and technical assets front outside.under growing budget constraints, have grasped the need fn other, somewhat more strictly defined circumstances,for relations with industry and have more clearly defined inter-firm agreements can also provide firms with a possibilitytheir objectives in this respect. The creation of specific of pooling limited R&D resources in the face of rising costs.university-industry units in many universities as well as in Likewise, inter-firm agreements can help create the linkages front which "systems" (e.g. market and non-market rela-a number of large firms has no doubt made a positive tionships of sonic stability among firms and between these andcontribution here. Apart from difficulties over intellectual other forms of organisations) can emerge. As suggested inproperty rights on research results, tensions which stay particular by Japanese authors, "systems" of this kind appear tostill stark university-enterprise relations today include the be the basis of many key contemporary technologicalcompetition for human resources (universities and firms developments (Imai and Itami, 1984). If this is the case, thenare competitors in the market for scientific and technical the significance of inter-firm agreements in relation topersonnel, see Chapter 6) and problems of communication contemporary developments in science and technology maybetween university scientists and business managers. well go far beyond the already important advantages of pooling sub-critical R&D resources, or combining skills andThese are most marked for SMEs lacking R&D knowledge on an interdisciplinary basis (Chesnais, 1988b).departments, those who are in fact in greatest need oftechnological support from universities. 72
  7. 7. For the reasons given in Box 18, agreements show where high levels of industrial concentration have led to considerable range and variety (Chesnais, 1988b). Cooperation the emergence of oligopolistic supply structures (see Chapter and/or technology exchange between firms (or between firms and 10)5. Here, however, inter-firm agreements are viewed other categories of research organisations) may take place at a exclusively in the light of their positive features. Use of the single point of the R&D - to-commercialisation process or may word "network" with respect to inter-firm agreements has been cover the entire process. They may concern either the creation of said to "highlight the mobility of alliances, the flexibility of new technology or the acquisition and use of an already existing arrangements, the volatility of configurations and the one or both. Co-operation may concern R&D exclusively, or it may multiplicity of modes of co-ordination, e.g. the fact that in also involve arrangements for market access and joint some parts 1f the network, the market is the instrument for co commercialisation. An attempt to categorise the types of ordination, in others this involves non-market organisational arrangements firms may set up with a view to producing, mechanisms, confidence and recognition" (Callon et al., exchanging and/or commercially exploiting technology in common 1990). is set out in Figure 6. The two left-hand columns reflect the Inter-firm agreements bearing to some degree or another university-industry co-operation networks discussed previously. on technology grew quickly from the early 1980s onwards The right-hand part of the figure presents the most classic forms of (see Box 18). As shown by table 7 and Figure 5, figures joint production and technology transfer. The new forms are published by data banks built up by universities and consulting concentrated in the centre. They include: firms6 suggest a strong increase in the number of recorded i) The new research corporations (column C). These are agreements up to 1986. A levelling of growth followed, with private sector joint ventures financed by a the notable exception of agreements in the area of information technologies. Figure 5. Growth of newly stablished technology co-operation agreements (biotechnology, information technologies and new materials)1989 first seven months only.Source: MERIT-CATI data bank. 73
  8. 8. Table 7. Trends in the growth of inter-firm agreements Author and type of agreement 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985Illadick (1985), 37 14 16 15 14 27 34 40 35 - - -Joint ventures by US firms in high incomecountriesRéseau, Milan (1985), 131 69 104 118 -Electronics industries atoneHacklisch (1986), - - - - 2 1 4 22 19 16 42 -41 targest world merchant semiconductorfirmsLAREA-CEREM (1986), - - - - - - 15 31 58 97 131 149Agreements involving European firms inR&D intensive industriesVenture Economics (1986), - - -0 - 30 30 30 60 100 150 195 245Corporate venture capital inv. agreementsSchiller (1986), - - - - - - - 22 58 49 69 90International agreements with US smallbiotech. firms Source: Authors compilation of figures from studies discussed in the teat or cited in the bibliography (Chesnais, 1988b). without shareholder participation, generally involving a very number of firms on a shareholder basis. Such corporations small number of firms possessing complementary basic in- conduct their research in separate laboratories or in other research house R&D. Agreements are of limited duration and are facilities set up specifically for that purpose. They are generally aimed at attaining strictly defined results. Philips and Siemens stalled both by personnel assigned by the joint venture partners are known to have often had agreements of this type and by personnel hired specially for the project. Programmes iv) A wide variety of technological agreements bearing on generally focus on generic technology that relates fairly directly completed "proven technologies" (column F). The forms to the competitive interests of the joint venture partners. The taken depend on the specific characteristics of industries and research results are proprietary and the joint venture activity, technologies. This category reflects the flexibility sought by while perhaps "pre-competitive" in the sense of being generic, firms Significant examples include technology-sharing has a clear commercial focus. In the area of micro-electronics, agreements between firms that are otherwise strong rivals the European Computer Research Centre (ICL, Bull and (e.g. the agreements between the United States and Japan in Siemens) and the Micro-electronics and Computer Technology CMOS (complementary metal-oxid, semiconductor), in which Corporation (21 US corporations) are examples of this type of US design capabilities have been shared in exchange for joint R&D venture; Japanese competence in CMOS fabrication technology); two- ii) Equity based agreements involving the use of corporate venture way exchanges of licenses or, more generally, of scientific capital by large firms to identify innovative processes within and technical knowledge produced by firms as a "by-product" smaller organisations and to monitor the development of new of their main lines of scientific and commercial specialisation technologies on file market (column D). This form allows large and provided to firms producing complementary "non-rival" firms to take good advantage of the continuous flow of new products (this type of arrangement is frequent in line technologies produced by small and medium sized companies. chemicals and pharmaceuticals). Through corporate venture capital, a large firm can appraise in "real time" its interest in technologies and products under Studies carried out since 1988 confirm that both the development, while not interfering with the activities of the small motivations for collaboration and the organisational forms that innovative units; these remain autonomous in their R&D and result are extremely varied (Link and Bauer, 1989; and Mytelka, management decisions. 1991b). Firms pursue cooperative agreements in order to gain fastiii) Non-equity co-operative research agreements to deal with specific access to new technologies or new markets, to benefit from econ- research problems (column E). These are highly flexible forms of omics of scale in joint research and/or production, to tap into co-operation sources of know-how located outside the 74
  9. 9. Figure 6. Inter-firm research, technology and manufacturing co-operation agreements and the R&D, production and marketing spectrum PRE-COMPETITIVE STAGE COMPETITIVE STAGE Research and development co-operation Technological co-operation Manufacturing and/or marketing co-operation A B C D E F G H 1University Government- Research and Corporate Non-equity Technical Industrial Customer- One-waybased industry development venture capital co-operative agreements joint venture supplier licensingco-operation co-operative corporations in small high- research and between firms firms and agreements, and/orresearch R&D projects on a private tech. firms (by development concerning comprehensive notably marketingfinanced by with univer- joint-venture one or by agreements completed R&D, manufac- partnerships agreementsassociated sities and basis several firms between two technology, turing and (includingfirms (with public research otherwise firms in Inter alia: marketing OEM salesor without institute competitors) selected areas technology- consortia agreements)public support) involvement sharing agreements; second sourcing agreements; complex two way licensing; cross-licensing in separate product markets Many partners Several Partners Few or very few partners Few or very few partners Source: Chesnais (1988b). 75
  10. 10. Table 8. Patterns of inter-firm agreements: are the customer-supplier or user-producer relation- general objectives ships included in Figure 6, column 11. In-depth Swedish research on inter-firm relationships connected with technical innovation has illustrated the Number Percentage relevance of user-producer interaction in innovation. A Simple agreements 1 500 79.6 detailed study, carried out by Hakansson at Upsala University, focuses on a representative sample of over 100 1. Technology transfer 251 13.3 Swedish small and medium-sized enterprises. It is 2. R&D integration 161 19.3 particularly useful because it sets user-producer interaction 3. Product integration .171) 19.7 within the context of a wider variety of network 4. Supply agreements 121 6.4 5. Marketing 311 16.5 relationships. The findings confirm that a significant fraction 6. Others 84 4.4 of the resources allocated to technical development involves Complex Agreements 383 20,4 co-operation with at least some external party and that a of wich: large part of the co-operation is largely informal and not 2+3 100 5,4 specified in any written contract. This was the case for close 2+5 59 3.1 to 80 per cent of all co-operation activities and suggests a 3+5 72 3.8 strong degree of trust and reciprocity (Hakansson, 1989, pp. 2+3i 5 38 2.0 112-113). 1+3 22 1.2 Other combinations 92 4.9 The most important finding is that in this universe of Swedish SMEs, user-producer agreements represent the Total 1 883 100 most frequent form of inter-firm co-operation, with activities .Source: Ricotta (see Chesnais, 1988b.) with customers and suppliers constituting 75 per cent of all such activities. Others are agreements with independent institutions producing new technology and science, which boundaries of the firm, and to share the risks for activities that may in fact be regarded as parties in user-producerare beyond the scope or capability of a single organisation. In a interaction (Hakansson, 1989, p. 98). These user-producersumming up of findings from US literature, Powell has suggested that relationships are durable: the average age of suchthe exact form of the agreement that firms will choose "appears to be relationships involving co-operation in development projectsindividually tailored to the needs of the respective parties, and to tax was close to 10 years.and regulatory considerations. The basic thrust, however, is quite Parallel analytical work, carried out at Aalborgobvious: to. pursue new strategies of innovation through collaboration University in Denmark, has pointed to the factors underlyingwithout abrogating the separate identity and personaliyt of the co- the density of user-producer interactions in the innovationoperating partners" (1990, p. 315). process7. Producer firms have strong incentives to establish Access to tacit and/or proprietary technological knowledge and close relationships with user firms and even monitor somethe preservation of the separate identity of firms explain why statistics aspects of their activity. Some of these incentives, such asfrom one of the best data banks [Futuro-Organizzazione-Ricorse the attempt to ensure that innovations are not stolen by(FOR), Rome] highlight the fact that: competitors, were studied in earlier technology transfer literature. Others are newer. In the case of equipment and i) R&D co-operation either in isolation or in combination with industrial processes, knowledge produced as a result ofother objectives (item 2 in Table 8) represents the single most learning by-using can only be transformed into new productsimportant objective of inter-firm agreements; and if the producers have direct contact with users. Bottlenecks ii) firms show a clear preference for non-equity agreements, and technological interdependencies, observed within usersince these effectively represent the least formalised, most flexible units, represent potential markets for the innovatingform and the one which best reflects the separate identity of producer. Producer firms may be interested in monitoringparticipants (at least over a transitory phase). the competence and learning potential of users in order to understand the capability of firms to adopt new products. In turn, user firms will generally need "information" about new products. This not only means awareness, but also quite User-producer relationships between firms specific inside information about how new, user-value One form of inter-firm agreement on which research has yielded characteristics relate to their specific needs. When new usersignificant results since the termination of the OECD study on inter- needs develop - for example, when bottleneck problemsfirm co-operation occur - user firms may be compelled to seek help from a producer in analysing and solving the problem. This requires detailed knowledge about the competence and reliability of different producers. 76
  11. 11. The overall picture: a maze of overlapping In situations where complex and specialised equipment and processes are developed and sold to users, direct co- networks operation is required throughout the process of innovation. In The picture which emerges from the evidence discussed earlier stages. the user may present the producer with specific above is that of a maze of overlapping networks. They range needs to be fulfilled. Subsequently, the producer may neat to from tightly knit but highly specialised and rather narrow install a product and start it up in co-operation with the user. networks among scientists in given sub-disciplines of the This is the phase in which the producer will often offer natural sciences or among production engineers within a specific training to the user. After the equipment has been narrow group of firms (in the same industry, country or brought on-Iine, the producer will normally recognise industrial district) to looser and much wider networks obligations to the user firm regarding the de-bugging of involving firms as corporate entities. technical hitches; the producer also has considerable interest in learning through the users own learning process. Authors tend to agree that for firms, a useful distinction may be made between the individual network which each Lundval1 (1991) argues that the pattern of user-producer large corporation builds and for which "it serves as a nucleus" relationships and the precise substance of inter-firm and the "wider set of technical alliances and consortia which relationships, in terns of reciprocity and response to the needs provide the ties that bring into contact these individual of the other partner, could have productivity-enhancing or networks". Networks of a given corporation will consist inhibiting effects. He proposes a typology of relationships that mainly of "relations among its own technical groups and could form the basis for future analysis and case study laboratories; linkages between its technical groups and uni- research. The categories include: producer-dominated versities; working relationships between its technical groups relationships and producer-organised markets in consumer and government technical organisations; trade associations; goods; producers dominating professional users; big R&D consortia (Fusfeld, 1990, p. 20). To these must be professional users dominating producers; stubborn user- added a number of the user-supplier linkages .just discussed. producer relationships: and situations characterised by lack of The wider networks include the global. transnational user-producer relationships. agreements which have recently been studied at Maastricht University (they are discussed in Chapter 10). 2. NETWORKS: SOME THEORETICAL AND PRATICAL CONSIDERATIONS centralised firm at the other, they suggest that the It is now necessary to formulate some generalisations intermediate or "hybrid" forms of organisation representedconcerning the "specifiable circumstances" under which by agreements lie between the two traditional poles of"relational". "linkage" or "network" forms of inter-firm organisation theory. Williamson, who earlier neglectedrelationships represent a "clearly identifiable form of economic linkages, is "now persuaded that transactions in the middleexchange" in matters pertaining to the production and use of new range are much more common" than he had previouslytechnology (Kaneko and Imai, 1991). Although the time is ripe for recognised9. He now suggests that markets, trilateralthe development of full-fledged "economic theory of networks" governance (involving action by mediating third parties),(Australia, Bureau of Industry Economics, 1991 ), most studies are bilateral governance (involving relational contracting"stiff couched in the framework of the Coase-Williamson theory of between firms) and hierarchies represent four alternativemarkets and hierarchies which serves as the starting point for the forms of industrial organisation or governance. Thefollowing analysis. frequency of transactions and the importance of asset specificity are now emphasised as variables affecting the predominating mode of governance (together with smallNetwork transactions in relation hr markets numbers, uncertainty and opportunism). In a continuum per-and hierarchies spective, one would move from the market pole, where prices capture all the relevant information necessary for Despite early arguments by Richardson (1972) to the exchange, towards putting-out systems, various kinds ofcontrary, authors have often taken the position that agreements lie repeated trading, quasi-firms, and sub-contractingsomewhere "in between" markets and hierarchies8. Arguing that arrangements. Contracted arrangements in the form ofeconomic exchanges can be arrayed in a continuum-like fashion. franchising, joint ventures and decentralized profit centreswith discrete market transactions located at one end and the highly inside network corporations would be located close to the hierarchy pole. 77
  12. 12. ditions and the risks associated with uncertain techno- However, the notion of the continuum fails to capture the logical trajectories have reduced the advantages of verticalcomplex realities of know-how trading and knowledge and horizontal integration and made hierarchies a lessexchange in innovation. The pervasive role played by efficient way of responding to market imperfections. But thereciprocity and collaboration, as a distinctive form of co- need to respond to and exploit market imperfections inordination in an activity with strong economic impact, requires technology has also increased, and has thus pushed inter-firmthat networks be envisaged as a separate form. "Relational agreements to the forefront of corporate strategy. In terms ofcontracting" may be the right way to characterise the new transaction cost theory, earlier arguments about marketforms of subcontracting which have emerged in connection failure in technology markets hold as strongly as ever, butwith "just-in-time" production management (see Chapter 4), inter-firm agreements may often be the most advantageousbut it is not appropriate for conceptualising many of the way of handling them" ( 1988b, p. 84).arrangements discussed above. A "markets" and "hierarchies"framework may hinder economists and technology policy This approach has subsequently received substantialmakers from properly identifying the theoretical implications support. Dunning argues that "to the extent that, likeof the present diversity of organisational designs. Table 9 administrative fiat within a single firm, inter-firm co-attempts to summarise some differences among markets, operation is a market-replacing activity, at least some of thehierarchies and networks. Networks can no longer be reasons for it should be found in the internalisation literature.considered as a hybrid and perhaps transitory form. They But to the extent that it involves more than one firm and,represent a type of arrangement with its own specific abstracting from distributional questions, there is a broaddistinctive features which must henceforth be considered in its coincidence of objectives among the participants, the form ofown right. The assertion that networks represent a distinctive governance is group oriented. To distinguish between theform of economic organisation now extensively used for two forms of governance we shall refer to inter-company co-exchanging production-related and value-creating assets possessing operation as group internalisatinr; such internalisation mightgiven characteristics implies that this form must also be defined. take the form of an equity joint venture or a non-equity In terms of transaction cost theory, the network mode agreement" (1988b, p. 343).offers firms a new way of handling market imperfections, inparticular those related to innovation. In certain circumstances, Some Conditions for exercising "network preferences"this mode is superior to both markets and hierarchies, but it isso because it is different from both and not somewhere "in On the basis of the available evidence, one can go abetween". As argued by Chesnais at the close of the OECD step further and give the many forms of exchange bearing onstudy on inter-firm agreements, "the complexity of scientific knowledge a more clearly defined conceptual status, alongand technological inputs, the uncertainty of economic con— the lines suggested by the last column on the right of Table 9. Summarising a wide Table 9. Stylised comparison of forms of economic organisation Parameters Forms Markets Hierarchies Networks Normative basis Contract Property rights Employment relationship Complementary strengths Means of communications Prices Routines Relations Methods of conflict resolution Haggling; resort to courts for Administrative fiat Supervision Norm of reciprocity enforcement Reputational concerns Degree of flexibility High Low Medium to high Amount of commitment among Low Medium to high Medium to high the parties Tone of climate Precison and/or suspicion Format, bureaucratic Open-end Mutual benefits Relations between economic agents Independence Hierarchical Interdependence Source: Adapted with minor changes from Powell (1990). The initiat conception of this tabte shoutd, however, probably be attributed to Kaneko and Imai (I987). 78
  13. 13. range of case study material, including technological agreementsbetween firms, produced both by social scientists and students ofindustrial and corporate organisation, Powell (1990, p. 13) offers a Box 19. Conditions suitable for establishing.fairly comprehensive definition. He suggests that "in network modes networksof resource allocation, transactions occur neither through discrete Situations in which firms may choose to form networks are thoseexchanges nor by administrative fiat, but through networks of where:individuals or institutions engaged in reciprocal, preferential, mutually i) "Complementary assets" - possessing a high degree of "tacitness-supportive actions. Networks can be complex: they involve either the intensity" and thus characterised by "appropriability" in the form of firm-specific, proprietary knowledge - represent veryexplicit criteria of the market, nor the well organised routines of the important inputs to the production of new knowledge and/orhierarchy. A basic assumption of network relationships is that parties technology or to production processes per se;are mutually dependent upon resources controlled by another, and that ii) The exchange of such assets and the associated learningthere are gains to be had by the pooling of resources. In network forms processes can only take place through fairly close contacts andof resource allocation, individual units exist not by themselves, but in personalised relationships;relation to other units. These relationships take considerable effort to iii) Economic instability, technological uncertainty and rapidestablish and sustain, thus they constrain both partners ability to adapt demand change place a premium on speed;to changing circumstances. As networks evolve, it may become more iv) High R&D costs force management to seek ways of pooling resources with other firms, in some cases even with rivals;economically sensible to exercise voice rather than exit. Benefits and v) Flexibility and the possibility of preserving the reversibility ofburdens come to be shared. Expectations are not frozen, but change as decisions are of importance; andcircumstances dictate ( ... ). Comple-mentarity and accommodation vi) There exist at least minimum expectations on the part of would-arue the corner-stones of successful production networks. be partners that reciprocity will prevail, implying the existence both of some basis for trust and some guarantee that Networks are not a panacea. In the case of inter-firm alliances, opportunism will receive appropriate punishment.studies by business management specialists have shown that inter-firmagreements have high costs of their own, which include high a) Regarding "appropriabitity" see Dosi (1988, p. 1 139ff.). Teecebureaucratic costs related to co-ordination and numerous risks related (1982 and 1986, p. 6) provides a recognised definition ofto opportunism, non-reciprocity, defection and "Trojan horse" "complementary assets".effects10. This is why networks are for firms a response to quitespecific circumstances (see Box 19). Where complementarity is a requisite for successful innovation,agreements are formed in response to the "appropriability" of key tacit mode. In areas such as biotechnology or new materials, they carryknowledge. The rather particular nature of the "information" which high premiums. Inter-firm agreements are easier to dissolve thanforms the substance of innovation-related network transactions, e.g. its internal developments or mergers. Their sunk costs are smaller,more or less marked tacit and/or proprietary character, emerges commitments are less definitive and inertia lower. As a result, muchclearly from the data presented above. As argued by Ciborra ( 1991 ), higher degrees of flexibility can be ensured.because of this exchange of tacit knowledge, technological alliancescan be seen as “learning experiments”. The condition of reciprocity and trust raises the most serious problems in all areas and is the hardest to guarantee. It is difficult to Many authors stress speed among the advantages that ensure that reciprocity (or near reciprocity) will really exist or thatagreements, linkages and inter-firm alliances have over internal power relationships - whether economic or institutional - will notdevelopment or acquisition through arms length relationships. This is dictate the real content of transactions bearing on tacit knowledgethe factor given most emphasis by Porter and Fuller: "the time (e.g. between large and small firms; between full professors orrequired to build expertise or gain market share internally is likely to heads of laboratories and associate professors or lecturers).exceed the time required with a coalition. As product life cycles haveshortened and competitive rivalry has intensified, the timing In the case of well-organised scientific networks, in particularadvantages of coalitions are increasingly important" (1986, p. 328). in natural sciences, the professions code of professional ethics will generally suffice to ensure Flexibility and reversibility represent a related, but nonethelessdistinct reason for preferring a network 79
  14. 14. larly the ideal of strategic alliances with technologically reciprocity and trust, although recent cases in biology and medicine sophisticated partners, is more likely to be promoted at the board (e.g. the scientific network working on AIDS) have shown that the level than by laboratory managers The latter have their own code may break down when financial and political pressures are informal networks for evaluating prospective partners based on peer strong. With respect to firms, Japanese and non-Japanese studies of group status. At this level, a good deal of informal collaboration, in research partnerships in Japan all strongly emphasise the role of trust terms of collective lobbying and avoidance of duplicated effort, in sustaining collaboration among competitors. While the competitive appears to go entirely unrecorded, but may potentially be much drive of each individual company is central to the success of the Japa- more effective than formal agreements (Casson, 1991, p. 278). This nese electronics industry, associations create a network of corroborates earlier work by Hamel et al. who point out that while relationships among firms for the common good. Competitors enter management may set the legal parameters for exchange what into joint research without the protection of clear patent agreements, actually gets traded is determined by day-to-day interactions of "yet secure in the knowledge that no party will cheat the others, engineers, marketers and product developers (1989). because cheating will surely be detected and punished in the future"11. Strategic alliances will be shaped by the complex game of co- Further tensions are generated in this area due to the fact that operation and competition between rivals and by market access perceptions related to trust and reciprocity, and more generally views objectives as well as by considerations relating to speed, costs, and about the ranking and weighting of the factors moulding the flexibility (see Chapter 1). Laboratory managers and engineers will "preference for network relationships" and the best way to achieve co- continue to be guided by a set of considerations largely based on operation will often differ considerably within corporations. A survey scientific networks. There will thus be two sets of partly of firms recently carried out at Reading University found that inter- overlapping network relationships, at times in harmony, at times firm collaboration, particu- partially in conflict.3.THE MORPHOLOGY OF NETWORKS AND NATIONAL SYSTEMS OF INNOVATION Actions aimed at favouring the building or consolidation of Box 20. A definition of the national system innovation-related linkages and networks have of course always of innovation implicitly been a fairly important component of national science and technology policies. Among other things, these policies foster the "The network of institutions in the public and development of basic information, strengthen existing networks by private sectors whose activities and interactions initiate, remedying their weak points, help build networks in areas where they import, modify and diffuse new technologies may be are lacking and provide the externalities that will encourage their described as the national system of innovation" development. A more explicit set of conceptual tools and indicators is (Freeman, I987a, p. 1). now being explored in work supported by the OECD and can help "The rate of technical change in any country and meet these objectives more effectively. the effectiveness of companies in world competition in international trade in goods and services, does not The need to identify national systems of innovation (see Box 20) depend simply on the scale of their Research and and to understand the way they work, has strengthened this Development and other technical activities. It depends requirement12. Even the narrower R&D components of national upon the way in which the available resources are systems, present in different combinations in all OECD countries (see managed and organised, both at the enterprise and at Box 21), can be seen to possess systemic features, to a greater or. the national level. The national system of innovation lesser extent, on account of two main factors: first, the financial may enable a country with rather limited resources, circuits originating in corporate investment and public funding nevertheless, to make very rapid progress through mechanisms, which ensure the "systems" stability and capacity to appropriate combinations of imported technology and local adaptation and development. On the other hand, grow; second, the linkages and inter-institutional relationships which weaknesses in the national system of innovation may bind the components together. An assessment of the qualitative lead to more abundant resources being squandered by features of these relationships and their effectiveness calls for a set of the pursuit of inappropriate objectives or the use of concepts and ineffective methods" (p. 3). 80
  15. 15. Box 21. Some institutions belonging to national systems of innovation Although a system of innovation is not simply another name for a research system in that it is rooted in the system of production and consumption (Andersen and Lundvall, 1988) and is part of the broad set of social and political institutions which give countries their specific identify, for purposes of science and technology policy-making the most typical component elements of a national system may be considered to include: i) National R&D capacity which has grown up on the basis of university and public sector institution building and is funded principally by government, other public funds and in some cases non-profit organizations ii) The components of the innovation system which are embedded in firms; these include of course the formal R&D component in the form of industrial laboratory R&D capacity, but also the vital engineering design and other types of innovative know-how for which firms represent the main if not the exclusive organisational basis; iii) The educational and training institutions on which the supply of scientists and engineers, but also of technicians and skilled workers possessing appropriate skill profiles at a given time, depends; iv) The science and policy making institutions which monitor the execution of R&D in the public sector and possibly ensure sonic degree of co-ordination with enterprise sector R&D.indicators drawing on the sociology of institutions as much as oneconomic theory. Concepts and indicators for the analysis of innovation-related networks The configuration of innovation-related networks the degree to which their activities resemble those ofobviously varies considerably. A more systematic analysis of university or public research centres).their morphological features may help identify the poles around - A technical or techno-industrial pole which generates artefacts,which they are organised and the nature and intensity of the pilot projects, prototypes and test stations, and which produceslinks that connect the components. It may also allow drawings, patents, standards, rules of the art, etc. It includes pilotidentification of their strengths and weaknesses. One aim of plants built by firms, vocational technology centres, etc.such analysis is to answer questions which may be of - A market pole, which corresponds to the universe of users and theconsiderable interest to policy makers. Can links be substituted professionals’ or practitioners’ market. The structure of this pole,or are they complementary? Are them co-ordinate? If so, are and therefore its relationship with other poles, may vary. It is clear,they formalized ? for example, that the relationship between a major industrial group and the final consumer will differ according to whether the consumer buys the product from a network of distributors working Component elements of networks in collaboration with the producer or whether the producer is forced to retail his goods through a concentrated distribution network (hypermarkets and their procurement agencies) that may impose its The links between actors and economic agents in own standards on the producer (see also the discussion of user-innovation-related networks may be arranged in a wide variety supplier linkages in Section 1).of configurations. Networks for given technologies or industrial “Intermediaries" and "translation" processessectors encompassing the whole innovation process (see Figure Iin Chapter I ) will involve the existence of three main "poles": The creation of linkages and the forms of co-operation established by the various participants in the innovation process will A scientific pole which generates knowledge and produce involve a series of "intermediaries". They are not limited solely todocuments in the form of scientific papers and trains personnel. material or capital goods. Four other categories of intermediariesThis pole is thus divided into a research component and a enter the linking process: disembodied information or documents oftraining component whose proximity will vary. This pole will any kind (books, articles, patents, notes, diskettes, letters, etc.);include external (public and private) research centres, technical artefacts (scientific instruments, machines, robots,universities, and some firms’ laboratories (depending on materials, etc.); trained personnel and their skills 81
  16. 16. Box 22. An example of a technology-specific integrated network (...) the specifications resulting from the experiment by the live companies and also the research work by the shared Laboratories were transmitted to Nikon and Canon at the same time as the development contracts for specific machines. These contracts and links were responsible for an almost entirely new creation by Nikon - photorepeaters - and stimulated work by Canon on its proximity positioner (...). Canon is now the leading supplier of proximity positioners and Nikon is also on the point of reaching the same position in the held of photorepeaters. Another effect of the development contracts signed with these companies is that they have in turn signed a major development contract with Ushio Denki for the development of a special new lamp for photocopiers. This company, which was already well established in the manufacture of ordinary photocopier lamps, where it has a substantial 70 per cent share of the world market, has rapidly won a 40 per cent share of the world market in lamps used in proximity printers (...). Similar links have been established between the laboratory studying crystals and the crystal manufacturer with frequent exchanges of information (...). Printing firms - Dainippon Printing and Toppan Printing - also have benefited from close links with shared laboratories which, in a certain fashion, have acted as intermediaries between the various groups involved in the integrated circuit manufacturing industrial system (...). The manufacturers of the ceramic casings for integrated circuits, which at the time were already well established in the market, now supply 90 per cent of the market for such casings" (Sigurdson, 1986, pp. 119-121 ). These examples led Sigurdson to conclude that, in addition to the 64K memory chip and a certain number of related scientific and technological advances (e.g. the alignment device for electron guns), one of the most important developments to emerge from the VLSI programme was the strengthening of inter-firm links, which thus contributed to the creation of a much more closely integrated industrial and technological system in the VLSI circuit production sector, tantamount to the formation of a technology-specific innovation-related network. (knowledge, know-how, etc.); funds supporting innovation series of mutually interrelated intermediaries arranged in subtle(subsidies, credits, orders). feedback loops and retro-actions. This operation will introduce continuity between the various actors, thereby creating a common The structure and efficiency of innovation-related systems may language. As a result, the network will become a space in whichdepend on the production, transformation, circulation and use of these information intelligible to all its members will circulate. The"intermediaries". In addition, the various actors who communicate, co- network of agreements set up as part of Japans Very Large Scaleoperate, confront and mutually define each other through interposed Integration (VLSI) project illustrates the results of these successive"intermediaries" should be included. From a sociological viewpoint, "translations" (see Box 22).networks possess two complementary dimensions. Signposts are pro-vided by the flow of "intermediaries" and their paths but also by theidentity, location and behaviour of the "actors" that use and transform The morphology of networksthese intermediaries. Front the point of view of policy, it may be important to Because of the variety and heterogeneity of the numerous types distinguish among the different forms taken by networks. They mayof network relationships and linkages, gaps in "compatibility" may be converging, dispersed or integrated; they may be long, short, oroccur that require bridging. In this case, a “translation” or incomplete.transposition process mast take place. In working towards a given stra-tegic objective, an actor will “translate” scientific facts, instruments The characteristic feature of strongly converging networks isand intermediaries; that is, he will re-interpret them and divert there their connectivity, or close linkage between different actors. Co-from their intended purpose in order to produce new texts, new ordination may be highly formalised and accompanied byinstruments and new machines. In other words, the transposition of mechanisms or rules linking actors and activities with varyinginformation or experience originating with a researcher or engineer in degrees of constraint. In a strongly converging network, "any actorone field must be mirrored by a similar action by a researcher in belonging to the network, whatever his position within itanother domain at the interface between their respective fields. The (researcher, engineer, sales staff, user, etc.), can at any timelength and complexity of the operation may vary. It may involve a mobilise all the skills within the network without having to embark upon adaptations, translations or 82