Article,
Innovation and inter-firm linkages: new implications for policy
Research Policy, 28 (8): 793-805 (1999/11)
Abstract
This article discusses the implications for competition, innovation
and learning of different forms of inter-firm linkage, ways to govern
them, different ‘generic systems' of innovation, and government policy.
It employs a transformed theory of transactions that can deal with
innovation and learning, and brings in trust next to opportunism
Nooteboom, B., 1996a. Trust, opportunism and governance: a process
and control model. Organization Studies 17 (6) 985–1010; Nooteboom,
B., 1996b. Towards a Learning Based Model of Transactions. In: Groenewegen,
J. (Ed.), TCE and Beyond. Kluwer, Deventer, pp. 327–349; Nooteboom,
B., 1999a. Inter-firm alliances: Analysis and design. Routledge,
London.. While trust has its limits and should not be blind, it
can lower transaction costs. For learning and innovation, it takes
the resource/competence perspective, supported by a theory of knowledge
developed in earlier publications. According to this theory people
perceive, interpret and evaluate the world according to cognitive
categories that have developed in interaction with the physical and
social environment. As a result people will perceive, understand
and evaluate differently to the extent that they have developed in
different environments without interaction Nooteboom, B., 1992.
Towards a dynamic theory of transactions. Journal of Evolutionary
Economics 2, 281–299; Nooteboom, 1999a.. This theory yields the
notion of ‘external economy of cognitive scope': people and firms
need outside sources of cognition and competence to complement their
own. That is the fundamental reason why inter-firm linkages are important,
especially for innovation. In order to produce high added value and
novelty, by utilizing the opportunities of complementary competencies,
firms need to make relation-specific investments which creates risks
of ‘hold-up' and ‘spill-over'. Building on earlier work, the article
identifies different instruments for the control of those risks Nooteboom,
1996a; Nooteboom, 1996b; Nooteboom, et al., 1997. Effects of trust
and governance on relational risk. Academy of Management Journal
40 (2) 308–338; Nooteboom, 1999a.. It identifies two ‘generic' kinds
of innovation systems, in terms of the mix of instruments for relational
governance, and discusses their merits and flaws with respect to
quality of products, diffusion, incremental and radical innovation.
One is close to practices in continental Europe and Japan. Another
is close to Anglo-American practice. There is a certain tendency
for the first to gravitate to the second. The article warns about
the dangers involved, and explores a possible ‘third way'.
