value insights

Innovation Networks Dimensions- Valutrics

Shorter innovation cycles, the escalating costs of industrial research and development as well as the dearth of resources force companies to find new ways of accelerating their innovation process. Innovation networks as a form of cooperation, can have advantages to enhance knowledge sharing and innovation within and across companies, therefore they are an increasing phenomenon in a knowledge-driven society

Networks are collections of nodes (persons, groups, organizations) and links or relations between them. The strength of links defines the structure of a network. In social studies it is common to  distinguished strong and weak links.  Strong ties bind close friends together (circle), whereas weak ties connect the members of close friendship circles to their acquaintances.

Innovations may impact several dimensions: a new product, service, process, organization, channel, model etc.  Often innovations are incremental, just providing better quality and performance. Sometimes there are radical or disruptive, offering new technologies and creating new markets. These are different types of innovation. Open innovation is related, on the other hand, to ways to produce innovation in collaboration using external ideas. So the notions of close and open innovations, or public innovation are network concepts too (inside, outside, shared). These are different modes of innovation.

From the viewpoint of innovation the role of external knowledge acquisition is decisive because innovation is “new combination of resources”. In fact, resources like knowledge, skills, talents etc. are distributed all over the world and global economy opens access to them. So a problem is how to find the right complementary resources firms need to make innovation = search problem. Another problem is the ability of firms to incorporate new resources into their own resources (dynamic and absorptive capabilities) = absorption problem. Innovation networks (exploration and exploitation networks) must provide solutions to both search and absorption problems.


The target of search networks is have better access to new information and explicit knowledge.  Networks of absorption are mainly devoted to improve capabilities and deepening the tacit knowledge pool of organizations.
We have six generic types of networks: Agora, Alliance, Diaspora, Fair, Guild and Netgora . In all links are different. Three first of these types presuppose face-to-face communication. Netgora is a web-based, “virtual” type of networks. Links in alliances and guilds are strong, whereas links in Agora and Netgora are weak. Links in alliances are formal, but in all  other networks links are informal.  All four types are ideal types of innovation networks: in reality these types are mixed and overlapping.


• Agora: a public place and space for meeting and changing ideas and information (Orig. a popular assembly for political or other purposes; a market place.).
• Alliance: a formal treaty or agreement between parties, an intimate relation, for collaboration and cocreation of knowledge.
• Diaspora: a distant community with close relations to its own environment and to the main community or headquarters .
• Fair: an exhibition, a gathering of buyers and sellers of ideas and knowledge. (Orig. an occasion or periodical exhibit, a steady or regular market)
• Guild: a local community of people with mutual interest, dependencies, and activities. (Orig. a corporation or association of persons engaged on kindred pursuit for mutual protection, aid etc.). Often guilds are professional clubs and use to keep monthly or annual meetings.
• NetGora: A web based site for sharing information about things generally interesting or about a specific topic; open or closed site.


 Benefits of Innovation Networks:
  • INCREASED SCALE AND SCOPE OF ACTIVITIES: the outcomes of collaboration may be applicable to all partners’ market, and thus may expand individual firm’s customer base. If a firm is part of a customary network, its performance capacity can be considerably extended through synergies between firm’s different technological competencies;
  • SHARED COSTS AND RISKS: costs for major innovations, such as a new generation of semiconductors or aircrafts, have risen rapidly and are now beyond the means of any single firm. Collaboration can share the high costs and therefore risks of innovation;
  • IMPROVED ABILITY TO DEAL WITH COMPLEXITY: many key technological developments are complex and draw on a wide range of scientific and commercial knowledge. This reinforces the need for co-operation from participants in different fields of expertise and a closer strategic and technological integration between firms is a means for dealing with the complexity of multiple sources and forms of technology;
  • ENHANCED LEARNING EFFECTS: with continuous and rapid market and technology change there are pressures on firms to improve their learning capacities. Collaboration and networks can provide possibilities not only of learning about new technologies, but learning about methods of creating future technologies and of the ways those technologies might affect the existing business. It can teach companies new ways of doing things not only technologically, but also organizationally;
  • POSITIVE WELFARE EFFECT: internalizing positive externalities through R&D collaboration results in increased R&D efficiency and an increase of overall R&D expenditure. A set of benefits underlying the collaboration is one that considers flexibility and efficiencies;
  • FLEXIBILITY: networks offer flexibility not in contrast to markets but to hierarchies. Vertically integrated firms establish overheads and production capacities, and in doing so forsake the flexibility of immediate resource reallocation that networks provide. Hence, large firm/small firm interaction might be facilitated such that the resource advantages of the former are linked with the behavioural or creative advantage of the latter;
  • EFFICIENCY: The efficiency enhancing effect of networks is related to the specific nature of technological knowledge. Much of the knowledge is tacit—that is difficult to codify in the form of blueprints—and firm specific. It is, therefore, difficult to transfer easily and quickly through market mechanisms. Collaboration provides a mechanism to transfer whereby this kind of transfer is based on trust between the partners;
  • SPEED: Speed may be needed to take advantage of opportunities that might not exist for long, and might require a fast response. An existing network can put together a package of resources and capacities to meet such challenges in a customized response which, in its flexibility and scope, lies beyond the capacity of an un-networked integrated firm.

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