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Born to be Sold: Start-ups as Products and New Territorial Life Cycles of Industrialization
Abstract
Territorial innovation models and policy practices traditionally tend to associate the emergence, resurgence and growth of start-ups with the development of local industries, either as industrial pioneers or as innovative spinoffs embedded in a regional production system. This approach is in line with a “life cycle” pattern of innovation and of industrialization marked by sequential waves of growth and decline, by technological renewal and by sectorial transitions. In a knowledge and financial economy characterized by combinatorial knowledge dynamics, by even shorter project-based innovations and by global financial and production networks, this approach is called into question.
Through the case of Swiss medical technologies (medtech), this paper highlights how local medtech start-ups’ evolution is shaped, from its early phase on, by the corporate venture strategies of multinational companies. While the economic potential of startups was traditionally perceived in a longer run, they seem to be more often “born to be sold” today. New research avenues and policy issues are finally derived from this particular case to
address territorial innovation and competitiveness in the future.
... A autora destaca essa tendência em pesquisas similares no contexto mexicano, onde a maioria das grandes empresas tende a se especializar na comunicação e na comercialização dos produtos e serviços, ao passo que as empresas menores ou microempresas dedicam-se especialmente aos processos de criação e inovação. Livi & Jeannerat (2015) corroboram e reforçam o argumento que esses pequenos empreendedores personalizam as mudanças econômicas pela sua capacidade de criar e explorar novas tecnologias, processos e oportunidades de mercado. E é por meio das ações individuais desses empreendedores, que combinadas podem ser percebidas como um processo de inovação coletivo. ...
... Ao investirem em inovação, essas pequenas start-ups também podem ampliar seu valor de mercado e ganhar a atenção de investidores privados que desejam obter lucros com a primeira fase de venda desses conteúdos e na fase final da venda da start-up para grandes grupos listados no mercado de ações. Esse ciclo gera um processo de reinvestimento, onde o dinheiro obtido na venda de uma start-up é geralmente reinjetado no sistema pelo empreendedor ao criar uma nova empresa voltada para a inovação (Livi & Jeannerat, 2015). ...
... Ao revelar o estágio de desenvolvimento dessas empresas, a Figura 4 mostra que 44,21% encontram-se nas duas primeiras fases de desenvolvimento Pré-Operacional e Start-up, confirmando os estudos nacionais e internacionais sobre a relação entre as start-ups e os clusters de inovação (Reis 2008;Livi & Jeannerat, 2015). Colombelli et al. (2016) reinteram esse argumento ao defender que essas pequenas empresas inovadoras são o núcleo de um tipo de empreendedorismo capaz de gerar pressão competitiva, crescimento produtivo, desenvolvimento econômico e em última instância a criação de empregos. ...
O presenter capitulo apresenta o mapeamento do ecossistema de Realidade Mista e Realidade Estendida em atuaçao no Brasil, com o intuito de contribuir na consolidacao de dados sobre o setor no pais. Foram pesquisadas 138 empresas entre os meses de Julho e Agosto de 2020, retratando dados demograficos, macroeconomicos e macro organizacionais sobre o setor.
... A start-up's aim is to uncover a business opportunity that can be exploited by an advantage, such as unique personnel, relationships, know-how, assets, or intellectual property, and its final objective is to provide wealth to investors through acquisition, merger, or an initial public offering (Jordan, 2014, p. 59). Livi and Jeannerat (2015) have also pointed out that eHealth start-ups seem to be more often aimed at increasing firm value and arousing the interest of large companies, with the intention of being sold. Moreover, Jordan (2015, p. 122) argued that other types of eHealth start-ups try to reach smaller or mature markets aiming to build revenue and profit over time. ...
... For instance, applying for a research grant, receiving the grant, conducting the trials, and then publishing the findings take time, which can result in the studied technology being outdated before it can generate enough evidence. As eHealth start-ups often suffer from the lack of resources, acquisition of research-based evidence may be difficult for them to achieve (Livi & Jeannerat, 2015;Morland et al., 2017). Furthermore, as healthcare has a much greater degree of existing political lobbying than many other industries (Parente, 2000), start-up companies may have weaker leverage than large companies. ...
... According to the findings, seeking and applying for funding typically take up a major portion of eHealth service start-up manager's effective working hours, which is even greater than the managers would expect or want during the start-up stage. These findings are consistent with those of Kaulio (2003) and Livi and Jeannerat (2015) who determined that, due to the lack of their own resources and a great deal of uncertainty of business, it often becomes extremely difficult for eHealth start-ups to secure financial capital for innovation, thus requiring the establishment of external resources and networks. The findings are also in line with the Mohout and Staelraeve's (2017) report, which pointed out that it takes an average of five years for eHealth start-ups to raise substantial external financing. ...
Healthcare and the well-being of populations are critical economic considerations. Increased healthcare service demand and the economic challenges faced by healthcare systems have recently intensified the need for effective, scalable, and innovative health services. Integration of digital technology into health services, known as eHealth, is an emerging and fast-growing area, which has been viewed as a key response to increased requirements of healthcare systems and services.
Start-ups have organizational agility, promising ideas, the willingness to take risks, and the
tendency toward growth that make them pioneers of innovation. EHealth service start-ups create digital solutions to meet the needs, complement traditional services, and even create new market in the areas of healthcare and well-being.
The theoretical framework of this study is based on the stages of growth approach, particularly from the viewpoint of the start-up stage of a service business. However, research areas related to start-ups in the eHealth context are also integral to this study’s theoretical background. As the start-up stage is the critical period for a new company’s survival and growth, growth management is of central importance. However, the current understanding of growth management in eHealth service start-ups is incomplete. Thus, there is a need for industry-specific understanding of eHealth service start-ups.
The aim of this study was to clarify the growth management of eHealth service start-ups. This multiple-case study used the critical incident technique in data collection, and the data were gathered from Finland, Sweden, and the United States.
The study revealed twelve characteristics of eHealth service business during the start-up stage which contribute to the understanding of growth management in eHealth service start-ups. Slow growth and extreme uncertainty were found to be key characteristics and the results of the other revealed characteristics. Moreover, the findings indicate that the literature on prior stages of growth does not provide research evidence that is precise enough about the growth management of eHealth service start-ups. Thus, the characteristics of eHealth service start-ups determined by this study should be taken into account in growth management.
The results of this study may be used to predict managerial challenges and to help managers to focus their attention on critical issues, which may lead to risk reduction during the start-up stage
... Moreover, other companies consider startups acquisition or collaboration as leverage for innovation (Kohler, 2016;Weiblen and Chesbrough, 2015;Livi and Jeannerat, 2015); as far as some researchers such as Livi and Jeannerat (2015) believe that startups are fundamentally born to be sold. The acquisition of startups is a win-win game because not only startups are supported but also from the big companies view, the acquisition of innovative newcomers contribute to the development of internal research and development (R&D), as well as the augmentation and diversification of technological capabilities (Andersson and Xiao, 2016). ...
... Moreover, other companies consider startups acquisition or collaboration as leverage for innovation (Kohler, 2016;Weiblen and Chesbrough, 2015;Livi and Jeannerat, 2015); as far as some researchers such as Livi and Jeannerat (2015) believe that startups are fundamentally born to be sold. The acquisition of startups is a win-win game because not only startups are supported but also from the big companies view, the acquisition of innovative newcomers contribute to the development of internal research and development (R&D), as well as the augmentation and diversification of technological capabilities (Andersson and Xiao, 2016). ...
... The other role of established companies is in collaborations. Startups, through alliances and partnerships with resident companies, achieve complementary resources and assets to accelerate their commercialization process (Livi and Jeannerat, 2015). Some established companies are also willing to acquire startups because of the innovative capabilities of them. ...
Purpose
The purpose of this study set out to introduce an alternative framework for explaining the formation of the innovation ecosystem based on the systematic literature review (SLR) and ecosystemic approach.
Design/methodology/approach
This paper is an SLR of studies from the year 2008-2018 that investigating startups’ innovation. SLR approach being used exploration, interpretation and communication method, which composed of seven steps as follows exploring topics, searching, organizing, evaluating and expanding, integrating and communicating. The output of this process is 63 documents that applied to synthesize the formation framework.
Findings
The systematic review of literature has shown that researchers in recent years have considered some entities such as incubators, financials suppliers, accelerators, universities and companies in relation to the startup innovations, which are described in this paper as key actors. The study of the relationship between these actors in the documents led to the identification of interactional necessities, including structures, infrastructures and networks. Finally, the processes studied in the literature were classified into three types of mechanisms, namely, the genesis, growth and development of startups innovations.
Research limitations/implications
The SLR approach is subject to limitations because some poor explanations amongst previous researchers may be repeated and reinforced. Also, in the protocol adopted in this paper, documents are limited in English.
Practical implications
The introduced frammework can be useful in identifying and understanding the requirements of startups and creating effective policies for their innovation development.
Originality/value
This paper reviews, summarizes and integrates the growing and scattered literature of the innovation ecosystem of the startups and delivers new facts for the future development of this field.
... Additionally, she argues that these trends particularly affect the relation between clusters of developed and developing countries and a more pronounced hierarchical division of labour between them, resulting in R&D in developed, and manufacturing in developing, countries. Livi and Jeannerat (2015) focus on the relationship between entrepreneurs and multinational companies. Using the case of Swiss medical technologies (Medtech), their paper highlights how the evolution of local Medtech start-ups is shaped by the corporate venture strategies of multinational companies. ...
... According to Gancarczyk (2015) it is modularization that affects all clusters and might result in a more pronounced hierarchy between clusters. Livi and Jeannerat (2015) demonstrate that the drivers behind cluster evolution change from innovative (i.e. inventing and producing new products that can be sold) towards financial dynamics (i.e. ...
... Trippl et al. (2015) describe the multi-scalarity of relations and institutions, from local to global scales, as an important research issue in the future. In Livi and Jeannerat (2015) it is the global firm that provides regional firms with capital. In Gancarczyk (2015) global firms' outsourcing strategies result in a stronger hierarchy of clusters. ...
http://www.tandfonline.com/eprint/jZyN2d5GIFVAQsA8AP7d/full
... The first theme covers research discussing the notion of technological convergence. Both, Livi and Jeannerat [49] and Chen et al. [50] provided evidence and indicate the tendency of technological convergence in the industry. They emphasize the need for continuous innovation and adaptation to stay ahead in the medical field, which can be achieved by combination a strong demand for innovation paired with continuous patenting. ...
... Saarela et al. [13] use a stage framework to identify the challenges faced by start-up managers, providing insights into the start-up growth stage in digital health. The traditional model of territorial innovation is challenged, with Swiss experience showing that med-tech companies are often shaped by multinational corporate venture strategies, classifying many as 'born to be sold' [49] In contrary, the lack of quality management strategies and issues related to challenges of growth management are key factors hindering development of digital health start -ups [53]. ...
Medical start-ups (MedTech) significantly contribute to the development and commercialization of innovative healthcare solutions, driving advancements in technology, enhancing treatment effectiveness, and supporting public health. This study explores the main themes and concepts related to MedTech start-ups, examines the research methods used, and identifies major gaps in the literature. A scoping literature review was performed by searching the Scopus, PubMed, and Web of Science databases for publications from 2012 to 2023, focusing on MedTech start-ups in titles, abstracts, and keywords. References were analyzed using the Bibliometrix package in R, and a coupling network analysis was conducted, visualizing results on a Coupling Map to identify key research themes and gaps. The research identified 480 unique articles on MedTech start-ups. After removing duplicates and following a PRISMA-based assessment, 79 articles were included in the review. The studies predominantly focused on organizations, including start-ups and Venture Capital funds (46%). Most articles (60%) used qualitative methods, 25% employed mixed methods, and 15% used quantitative methods. Geographically, 63% of articles focused on a single country, primarily the USA (35%), followed by Iran, Sweden, Switzerland, China, and Japan (2–4% each). Coupling analysis identified five topic clusters: crowdfunding for medical research, innovation in medical technology, new product development, digital start-ups, and the venture capital industry. This review highlights the significant role of MedTech start-ups in advancing healthcare innovations despite challenges like regulatory hurdles and high capital requirements. The literature emphasizes the importance of collaboration among universities, industry, and government for successful commercialization. The geographic concentration in the USA indicates a need for more inclusive research. Crowdfunding and venture capital emerge as crucial funding sources, suggesting strategies to mitigate risks and enhance innovation success.
... Notably, startups have increased in this process and are now a key factor in improving countries' economies (Carree & Thurik, 2010;Fairlie et al., 2016;Adelino et al., 2017;Chung et al., 2021). Their emergence leads to positive outcomes such as job creation (U.S. Census Bureau, 2016;Hyder & Lussier, 2016;Guzman & Stern, 2016), social mobility, economic stability (Carree & Thurik, 2010), growth acceleration (Watson & Everett, 1993), recession mitigation, enhancement of the competitive landscape (Livi & Jeannerat, 2015), augmentation of economic efficiency (Liao et al., 2008), addressing social and environmental challenges, and benefiting the collective welfare (Dyllick & Muff, 2016). ...
The emergence of startups and their influence on a country's economic growth has become a significant concern for governments. The failure of these ventures leads to substantial depletion of financial resources and workforce, resulting in detrimental effects on a country's economic climate. At various stages of a startup's lifecycle, numerous factors can affect the growth of a startup and lead to failure. Numerous scholars and authors have primarily directed their attention toward studying the successes of these ventures. Previous research review of critical failure factors (CFFs) reveals a dearth of research that comprehensively investigates the introduction of all failure factors and their interdependent influences. This study investigates and categorizes the failure factors across various stages of a startup's life cycle to provide a deeper insight into how they might interact and reinforce one another. Employing expert perspectives, the authors construct fuzzy cognitive maps (FCMs) to visualize the CFFs within entrepreneurial ventures and examine these factors' influence across the four growth stages of a venture. Our primary aim is to construct a model that captures the complexities and uncertainties surrounding startup failure, unveiling the concealed interconnections among CFFs. The FCMs model empowers entrepreneurs to anticipate potential failures under diverse scenarios based on the dynamic behavior of these factors. The proposed model equips entrepreneurs and decision-makers with a comprehensive understanding of the collective influence exerted by various factors on the failure of entrepreneurial ventures.
... Key actors in this stage are the higher education systems, startup competitions, and local governmental agencies as principal providers of knowledge and supports [19,41]. This initial stage is characterized by a great deal of uncertainty [42]. ...
The aim of this paper is to investigate whether startup evolution can be conceptualized in a life cycle model intended as an unpredictable sequence of stages, where startups need to find actors with whom to collaborate to acquire knowledge and resources supporting the effectiveness and the sustainability of their mission. The creation and implementation of collaborative networks is observed through the lens of the holistic approach to the entrepreneurial ecosystem, whose purpose is to build “bridges” between different actors through the creation of communities of best practices or entrepreneurial networks. The creation of a specific ecosystem is suggested to ease the new digital entrepreneurship generation toward acquiring an appropriate level of knowledge, skills, financial facilitations, and entrepreneurial culture. Following a multiple case study analysis based on nine successful Italian digital firms, the empirical evidence seems to confirm that firms collaborate with different actors in different stages, as knowledge and resource networks play a critical role in sustaining the evolution and success of new firms.
... By narrowly investing in industry segments relevant to their respective parent, they keep in touch with promising new drugs developed by startups. If the drug or technology has proved its potential or steered around major hurdles on the complex approval procedures, the startup is often fully acquired by the corporate (Livi & Jeannerat, 2015). The strong focus on specific industries goes along with no geographic investment preferences so that most portfolios of VC firms following this business model are scattered globally over regions relevant for their respective industry. ...
Venture capital (VC) firms are crucial actors in entrepreneurial ecosystems. Through the development towards a digital economy, they have gained further relevance, which caused the VC industry to diversify in terms of business models. This article offers a new heuristic to study the VC industry by developing a classification of VC firms. By drawing on a framework of different dimensions of relational distance in investment relations, different types of relational coordination are identified by comparing VC firms in Germany. The types of VC business models are found to produce relational geographies of investing as they relate with their portfolio startups in different ways. A relational perspective on VC thus provides the opportunity to step beyond pure territorial approaches on VC.
... 8 An illustration of these weak relational ties engendered by re-locating to Silicon Valley was the exposure to potential acquirers. This is especially important for many start-ups, many of whom increasingly seek to be acquired rather than to grow into larger scale corporate entities (Livi & Jeannerat, 2015). ...
This paper examines the role of accelerator programmes in promoting transnational entrepreneurship. Designed to assist the growth of start-ups by providing seed finance and structured entrepreneurship support, these programmes are now a prominent feature in many entrepreneurial ecosystems around the world. Drawing on in-depth qualitative evidence focused on one particular programme, the paper shows accelerators play an important intermediary or ‘brokerage mechanism’ providing start-ups with enhanced relational connections and networks. Transnational entrepreneurs attracted to these programmes are highly focused on exploiting these networks whilst maintaining multiple levels of embeddedness in various contexts to maximize the opportunities afforded by accelerators. While many governments are attempting to replicate accelerators programmes within the public sector, the paper concludes that such attempts may prove problematic within weaker entrepreneurial ecosystems.
... Modern economic trends and acceleration of scientific and technological processes lead to increasing numbers of start-ups, development of new production systems and, consequently, to the formation and development of cluster structures in modern world economy, which makes the need for research in this sphere really urgent [1,2,3,4,5,6,7,8].. ...
The aim of the study is the development and testing of an algorithm for modeling the impact of advertising on various stages of the life cycle of economic clusters. It is assumed, that the life cycle of the cluster consists of the stages: a diffuse group, a hidden cluster, an evolving cluster, a mature cluster, a collapsing cluster. Using the agent-based simulation methods, hierarchical clustering and chaos theory, the following results were obtained: a conceptual model of the behavior of cluster members for cluster formation processes at each stage of the cluster life cycle and an imitation model of the influence of advertising on the life cycle of the economic cluster; the patterns of various stages of the life cycle of the economic cluster and the functioning of the cluster without influence and under the influence of advertising were revealed. Advertising reduces the time at the stages of the associated life cycle of the cluster, increases the stage of maturity of the cluster. Companies that do not comply with the principles of clustering are under the influence of advertising and promotional activities. Such enterprises most often arise in the cluster at the stages of its formation.
... As such, it allows for a much more flexible analysis of the complexand, hence, not deterministicprocesses of cluster evolution (Martin & Sunley, 2011). Some of the above criticisms have been recently taken up by evolutionary scholars, who have elaborated and empirically tested a variant of the CLC approach (Belussi & Hervás-Oliver, 2017;Fornahl et al., 2015), which gives room to multiscalar socio-economic dynamics (Martin & Coenen, 2015;Santner & Fornahl, 2014), the role of agency and exogenous factors (Livi & Jeannerat, 2015;Rodriguez-Rodriguez, Morrison, & Troncoso-Ojeda, 2017). ...
The ‘life cycle’ approach has become popular in studies on industrial clusters. However, some concerns have been raised over the inherent determinism of this approach and its tendencies to focus exclusively on cluster internal dynamics while neglecting the role of external factors and socio-economic contingencies. This paper addresses these criticisms by investigating the long-term development of Castel Goffredo, a traditional textile cluster in Italy. In our analysis, we identify and characterize the main stages of the life cycle and its antecedents. We single out the main triggering factors behind each of these stages and show that a variety of factors, both external and internal to the cluster, contributed to its development. Our findings confirm that an ‘adaptive’ cycle approach, which focuses also on contingencies and external factors, appear to be appropriate for investigating the long-term evolution of clusters.
... Key actors are the higher education systems and the government and local agencies as main catalysts of an entrepreneurial culture. This initial stage is characterized by a great deal of uncertainty (Livi and Jeannerat, 2015). ...
This paper is aimed at understanding, by considering a process theory perspective, whether start-ups can be conceptualized in a lifecycle model intended as a not predictable sequence of stages, where key activities and resources are necessary for supporting effective transition from the stages prior to the start-up (launch) up to the consolidation/expansion stage. Following a multiple case study approach, the empirical evidences seems to confirm that the tentative lifecycle model proposed is able to grasp the different aspects of the stages that characterize the evolution of the start-ups from ideation to consolidation. The proposed model seems to fit the evolutionary path of the start-ups and is able to favour the analysis, planning and management of flourishing start-ups development.
... By narrowly investing in industry segments relevant to their respective parent, they keep in touch with promising new drugs developed by startups. If the drug or technology has proved its potential or steered around major hurdles on the complex approval procedures, the startup is often fully acquired by the corporate (Livi & Jeannerat, 2015). The strong focus on specific industries goes along with no geographic investment preferences so that most portfolios of VC firms following this business model are scattered globally over regions relevant for their respective industry. ...
Venture capital firms as capital providers for emerging high-?‐growth enterprises are not only said to have some impact on regional development, but also are central actors in wide networks through which they generate knowledge crucial to their investment decisions. Following a relational and practice-?‐oriented approach, this paper puts emphasis on investment routines or "business models" of venture capital firms and explores how these affect the spatial dimensions of investments. With the surge of both the number of deals and the amounts invested into innovative new companies in recent years, the upward trend is not limited to the United States, where venture capital investments always have been much more abundant, but venture capital investments show also significant growth rates in Europe and especially in Germany, where the amount of capital invested has grown rapidly in recent years. Along with the strong growth, the industry shows signs of diversification of strategies and business models, ranging from the exchange of business services against equity up to approaches to internalize the company founding process entirely. By using a classification of business models applied by venture capital firm in Germany, this paper points at the significant variations in outcome, measured in the spatial dimensions of investment decisions that are produced through different investment routines. Through comparing a wide range of investment practices in different investment firms, it is argued that the recent diversification of business models used by venture capitalists is constituted by differences in the spatial-?‐temporal configurations of proximity being set up between investor and investee.
The literature review outlines a three-step procedure for analyzing corporate venture (CV) tools in the manufacturing industry. Firstly, a selection of general CV tools from the literature was identified. Secondly, tools specific to the manufacturing industry were derived, and their properties were explained. Lastly, the general tools were compared to the specific tools to identify differences. The analysis produced two key findings. Firstly, six perspectives that influence the development and design of CV instruments in the manufacturing industry were identified. These perspectives included development, resources, financing, innovation, and methods. Secondly, the specific CV tools discussed in the manufacturing industry were identified, as well as those that are currently underrepresented. The analysis provides valuable insights for manufacturing companies that want to invest in start-ups and innovation. By identifying instruments that complement each other and can be combined effectively, companies can better plan and implement their investments, ultimately leading to more successful outcomes. Overall, the article highlights the importance of a systematic approach to analyzing CV tools in the manufacturing industry. The identification of specific tools and their properties, as well as the perspectives that influence their development, can help companies to make informed decisions when investing in start-ups and innovation.
Innovation in its best generation occurs through extensive interactions and exchange of knowledge and products among actors with life-like characteristics. These characteristics are better understood in the form of the ecosystem concept, and it becomes possible to make policies, especially when toddlers are concerned. The current research has studied the startup innovation ecosystem intending to identify the leading players and their key roles. This research has two qualitative and quantitative stages. The qualitative part is a systematic review of the literature of the last ten years through seven steps, including keywords determination, search, organization, evaluation, expansion, interpretation, and presentation. This section’s result identifies universities, growth centers, financial providers, companies, accelerators, and science and technology partners as the leading players and the foundation, creation, support, coaching, and organization as critical roles. Theoretically, this research has identified a framework with the minimum requirement to form a startup innovation ecosystem. In a practical sense, it indicates that the country of Northern Cyprus is mainly supportive and needs to pay attention to other roles for the development of the ecosystem.
Switzerland is a small, open economy, and its medtech industry is one of the most integrated in the existing global networks. An examination of M&A activity shows the prominent presence of foreign (mostly US and German) firms in Switzerland, while the pharmaceutical giants (Roche and Novartis) expanded their medtech divisions via takeovers of numerous firms around the world. Foreign trade statistics capture the specialization of the Swiss medtech industry and its high-level competitiveness in the field of orthopedic equipment. In analyzing the sources of this comparative advantage, this chapter demonstrates the establishment of a cluster of firms active in the manufacturing of implants since the late 1950s, along with their growth in the global market, thanks to cooperation with Swiss universities and research institutes.
Notwithstanding the cutting-edge work being undertaken by many scholars – some of whom are represented in this collection, many of whom are not – a number of truths about the geography of innovation seem to be universally acknowledged, at least beyond the confines of academe. Some examples of accepted truths are: that innovation occurs more easily in certain places – such as large cities and (high-tech) clusters; that creativity (and creative people) is the key driving force of innovation; that economic growth and social development rest upon innovation; that innovation can (easily) be measured by indicators such as patents; that there is agreement over what innovation is and why it is studied; and so on. There is, however, increasing discomfort with existing paradigms and stylized facts that organize the conceptualization of innovation’s geography, discomfort that is by no means restricted to the editors of this Handbook, as many of the chapters make clear. An increasing body of work has been gathering momentum since the early 2000s as a new generation of researchers has questioned these accepted truths. In this introductory chapter we elaborate on this argument and spell out six 'confusions' which run through current thinking on the geography of innovation
Partant du postulat que les modèles territoriaux d’innovation nécessitent aujourd’hui de considérer les nouvelles dynamiques territoriales et socio-économiques de l’innovation, cet article tente de donner un éclairage particulier, à travers une recherche qualitative, sur le développement des innovations dans le domaine des technologies médicales en Suisse occidentale et sur la valorisation des dispositifs médicaux par les producteurs. D’une part, il met en évidence que les dynamiques territoriales de la production et de la consommation des dispositifs médicaux incarnent des relations multi-locales s’organisant à des différentes échelles, tant institutionnelles que sociales. D’autre part, il propose une clé de lecture de la communauté de production-consommation des dispositifs médicaux – à travers la convention de déstigmatisation – selon laquelle la relation producteur-consommateur se base sur des discours appliqués aux dispositifs par les producteurs selon le public cible de l’application et qui dépassent les valeurs techniques lorsque ces dernières sont destinées aux patients.
Resumen La manera en que los empresarios planean sus negocios y construyen sus compañías, determina el tipo de relaciones entre academia industria y gobierno. ¿Pero cómo se forman los estilos regionales de planificación y emprendimiento específicamente? Este artículo conceptualiza a los empresarios como una comunidad de práctica y muestra que las narrativas pedagógicas en esta comunidad juegan un papel crucial en la forma en que establecen sus negocios porque los empresarios aprenden tanto del mito como de la realidad de éxitos y fracaso de negocios similares; estas narrativas forman las imágenes mentales que los empresarios usan para establecer sus propios objetivos y estrategias. En particular, estas historias resuelven la compleja dinámica de la capitalización financiera. Nuestros resultados reportados aquí se basan en entrevistas biográficas con empresarios y emprendedores seriales en el grupo de biotecnología de Viena, Austria.
Purpose
This study focuses on the early development of eHealth service start-ups. To elaborate the research problem, the study addresses the following research questions: How do managerial experiences in eHealth service start-ups relate to the central findings of the recent empirically-based stages-of-growth literature? What context-specific viewpoints should be considered when using the stage framework in relation to eHealth service start-ups?
Design/methodology/approach
In this explorative multiple case study, we test a growth framework describing the early stages of eHealth service firms through eight case studies. We utilise the critical incident technique and semi-structured interviews in the data collection.
Findings
When taking into account the key contradictions assessed in the study as well as context-specific features of eHealth businesses, the empirically-based stage framework seems to be a useful starting point for reflecting on and predicting the challenges faced during the early development of eHealth service start-ups. Slow growth due to several factors and the essential role of the public sector were commonly emphasised elements of the context-specific viewpoints of the eHealth service business.
Practical implications
The results may be used in start-ups and intermediary organisations as a framework for predicting managerial challenges during the start-up stage of an eHealth service business.
Originality/value
Numerous universal models and frameworks have attempted to clarify management priorities during the early stages of business. However, context-specific viewpoints and their effects on start-ups have not been broadly studied. This study provides new insights into growth management in the eHealth context.
Most studies portray cluster knowledge bases as a given resource, tied to specific industries and locations. However, this paper challenges that view and uncovers their dynamic nature by identifying endogenous and exogenous triggering events that influence and change the cluster knowledge base mix over time. This is done by building on the theoretical concepts of pre-existing conditions, triggering events and knowledge bases and by drawing on a case study of the design cluster located in the Triangle Area of Denmark. The paper concludes that the design cluster has changed its mix of knowledge bases several times during its evolution. Starting out as a firm-driven cluster with a dominant synthetic knowledge base, it then evolved into an artistic and creative cluster with a prevailing symbolic knowledge base. In the last few years, the cluster has increasingly adopted an analytical knowledge base at the expense of other knowledge bases. These developments have caused numerous changes in both knowledge building and the sources of knowledge in and around the cluster. These findings have implications for the framing of cluster knowledge bases, considering how they emerge, change and combine, as well as how that affects clusters’ composition of actors, activities and resources.
In this paper, a systematic account of the idea and content of regional innovation systems is presented. This depends intellectually on discoveries made byregional scientists, economic geographers and innovation analysts working at the national level, who observed several features of actual innovation processes by firms and among firms and researchers that put in question received wisdom. The received wisdom was often rather influenced by philosophy and sociology of science that uncritically internalised autobiographical accounts by famous scientists. They stressed the logical progression of discovery from theory to experiment, confirmation to validation and science to technology,but left many puzzles, not least how change occurred. This is noted in the first main section of this paper as a prelude to a brief but highly illustrative account of the precise mechanisms operating in a specific biotechnology innovation system centred in Massachusetts. Although single cases should merely be heuristic rather than scientifically definitive, one alone is sufficient to refute conventional wisdom, rather as Karl Popper noted when a black swan was discovered in Australia.
This article examines five common misunderstandings about case-study research: (1) Theoretical knowledge is more valuable than practical knowledge; (2) One cannot generalize from a single case, therefore the single case study cannot contribute to scientific development; (3) The case study is most useful for generating hypotheses, while other methods are more suitable for hypotheses testing and theory building; (4) The case study contains a bias toward verification; and (5) It is often difficult to summarize specific case studies. The article explains and corrects these misunderstandings one by one and concludes with the Kuhnian insight that a scientific discipline without a large number of thoroughly executed case studies is a discipline without systematic production of exemplars, and that a discipline without exemplars is an ineffective one. Social science may be strengthened by the execution of more good case studies.
Today, economic growth is widely understood to be conditioned by productivity increases which are, in turn, profoundly affected by innovation. This volume explores these key relationships between innovation and growth, bringing together experts from both fields to compile a unique Handbook. © Philip Cooke, Bjørn Asheim, Ron Boschma, Ron Martin, Dafna Schwartz and Franz Tödtling 2011. All rights reserved.
A new economic geography of finance is emerging,
and the current “financialization” of contemporary economies has contributed greatly to the reshaping of
the economic landscape. How can these changes be understood and interpreted, especially from a territo-
rial point of view? There are two contradictory eco- nomic theories regarding the tangible effects of the
rise of the finance industry. According to neoclassical financial theorists, the finance industry’s success is 313 based on its positive effects on the real economy through its capacity to allocate financial resources efficiently. An alternative approach, adopted here, posits that finance does not merely mirror the real economy and that the financial economy, far from being a simple instrument for the allocation of capital, has its own autonomy, its own logic of devel- opment and expansion. A series of complex, and sometimes contradictory, connections link financial markets and the real economy, and there are some tensions between them, calling into question the coherence of the regional and national economies that follow from them. Moreover, the territorial approach shows how the mobility/liquidity of capital and the changing dimensions of new regions and countries
are central to the finance industry’s functioning. This article builds an understanding of the financial system through the lens of pension funds and high- lights the impact of such a system on the real economy and its geography
'This is a book of high interest for scholars, practitioners and policy-makers interested in innovation, knowledge flows and respective policies. A number of well-known authors investigate drivers of innovation, the dynamics of networks, and the role of platforms in both high- and low-tech sectors applying a framework of knowledge capability, knowledge phases and "worlds of production" amongst others. Investigated sectors include food and drink, tourism, the automotive industry, ICT, the media, KIBS, and biotechnology. Examples of private and public policy platforms illustrate the theme.' © Philip Cooke, Carla De Laurentis, Stewart MacNeill and Chris Collinge 2010. All rights reserved.
Today, economic growth is widely understood to be conditioned by productivity increases which are, in turn, profoundly affected by innovation. This volume explores these key relationships between innovation and growth, bringing together experts from both fields to compile a unique Handbook.
Annabelle Gawer presents cutting-edge contributions from 24 top international scholars from 19 universities across Europe, the USA and Asia, from the disciplines of strategy, economics, innovation, organization studies and knowledge management. The novel insights assembled in this volume constitute a fundamental step towards an empirically based, nuanced understanding of the nature of platforms and the implications they hold for the evolution of industrial innovation. The book provides an overview of platforms and discusses governance, management, design and knowledge issues.
The aim of this paper is to identify regions with industrial clusters in Germany and to analyse their entrepreneurial environment. A new index employing industry data supplied from the German Federal Labour Office is used to elaborate on spatial clusters in the most concentrated German industries. A second data set collected as part of the Global Entrepreneurship Monitor (GEM), serves to assess the relationship between regional clusters and entrepreneurial activities and attitudes. The paper tests the rather popular but hitherto seldomly empirically-proven hypothesis that the existence of one or several industrial cluster(s) in a region has a positive impact on the number of start-ups and attitudes in the very same region. The implications of the findings with respect to regional policies encouraging industrial clusters are discussed briefly in the concluding section.
Only since the early 1990s, when unemployment rates in Switzerland soared to unprecedented levels, has federal technology and innovation policy begun to design their activities with regard to employment and the establishment of new firms. Now, all across the country, private as well as public incubator facilities, technology and innovation centres have begun to spring up. This paper starts by describing the theoretical and methodological background of a survey of incubator, technology and innovation (ITI) centres. In a first step, all cantonal offices for economic promotion were asked to report and to describe incubator facilities, technology and innovation centres within their realm. In a second step a selection of centres were analysed in depth. The key findings are that: (1) ITI centres are most commonly established by a combination of public and private initiatives; (2) the main motive for the creation of ITI centres is to promote startups and the innovative potential; (3) most ITI centres offer space to rent and make available joint amenities; (4) ITI centres are predominantly in manufacturing, services, and development activities; their level of technology input is high or very high; and (5) the spatial reach of most of the ITI centre is on the region. Together with selected foreign experiences, some conclusions and recommendations for the operation of such centres are formulated.
This article examines five common misunderstandings about case-study research: (a) theoretical knowledge is more valuable than practical knowledge; (b) one cannot generalize from a single case, therefore, the single-case study cannot contribute to scientific development; (c) the case study is most useful for generating hypotheses, whereas other methods are more suitable for hypotheses testing and theory building; (d) the case study contains a bias toward verification; and (e) it is often difficult to summarize specific case studies. This article explains and corrects these misunderstandings one by one and concludes with the Kuhnian insight that a scientific discipline without a large number of thoroughly executed case studies is a discipline without systematic production of exemplars, and a discipline without exemplars is an ineffective one. Social science may be strengthened by the execution of a greater number of good case studies.
Martin R. and Sunley P. Conceptualizing cluster evolution: beyond the life cycle model?, Regional Studies. Although the literature on the evolution of industrial clusters is not vast, a preferred approach has already become evident based around the idea of a cluster 'life cycle'. This approach has several limitations. This paper explores a different conception of cluster evolution, drawing on the 'adaptive cycle' model that has been developed in evolutionary ecology. Using this model, cluster evolution is viewed as an adaptive process with different possible outcomes based on episodic interactions of nested systems. Though not without limitations, this approach offers greater scope as a framework for shaping the research agenda into the evolution of clusters.
Brenner T. and Schlump C. Policy measures and their effects in the different phases of the cluster life cycle, Regional Studies. In recent years, policy measures have frequently been applied to clusters. This paper analyses whether different types of policy measures should be applied in different stages of the cluster life cycle. Two approaches are used to obtain answers to this question. First, insights are gathered from the existing literature on policy measures and evaluated. Second, a mathematical model is set up in order to examine the effects of various policy measures in the different life cycle phases. It is found that the adequate kind of policy measures depends on the cluster's current stage in its life cycle.
This paper concerns the brief history of the Regional Innovation Systems (RIS) concept. It shows that the success of the concept in academic and policy circles is because, unlike most regional economic policy instruments, it is flexible and eschews ‘one-size-fits-all’ type thinking by analysing and advocating different instruments according to the characteristics of the region. There are three sources of influence upon the concept. The first one is general systems theory, especially as it evolved in the late 1960s as the systems planning perspective. Second the innovation systems approach was influenced by an emergent regional innovation policy and practice literature in the 1980s. Finally, it drew on ideas of ‘network regions’ which themselves have origins in industrial district theory, milieu research and innovation systems studies. Most recently the use of ‘related variety’ analysis, particularly applied regarding ‘green innovation’ has yielded an exciting explanation of regional growth by (Jacobian) cluster mutation. At the policy level, RIS strategies have in recent years been adopted by multilateral agencies and many countries and regions.
There exists a common belief that entrepreneurs commonly start businesses in garages (or basements or dorm rooms or kitchens).The garage entrepreneur is a highly popular contemporary legend, but not quite accurate. An emergent notion in academic research is that entrepreneurs are often organizational products. They typically acquire confidence, business knowledge, and social connections via prior experience at existing organizations. These psychological and social resources aid entrepreneurs informing companies. Although the belief of the garage entrepreneur contributes to the preservation of the American ideals of opportunity and upward social mobility, it offers misleading insights to would-be entrepreneurs because it suggests an under socialized view of the entrepreneurial process. Individuals, companies, policy makers, and business schools will benefit from recasting the garage as a contemporary legend and focusing instead on the lessons that can be derived from an understanding of entrepreneurs as organizational products.(Publication Abstract)
From Fordism to Flexible AccumulationFlexible Accumulation and Patterns of IndustrializationNew Industrial SpacesTowards a Theoretical Synthesis
Location of new products, 191. — The maturing product, 196. — The standardized product, 202.
Rev.& expanded from Case study research in education,1988.Incl.bibliographical references,index
Large companies have long sensed the potential value of investing in external startups, but more often than not, they fail to get it right. Remember the dash to invest in new ventures in the late 1990s and the hasty retreat when the economy turned? This article presents a framework that will help a company decide whether it should invest in a particular start-up by first understanding what kind of benefit might be realized from the investment. The framework-illustrated with examples from Intel, Lucent, and others - explains why certain types of corporate VC investments proliferate only when financial returns are high, why other types persist in good times and in bad, and why still others make little sense in any phase of the business cycle. The framework describes four types of corporate VC investments, each defined by its primary goal - strategic and financial and by the degree of operational linkage between the start-up and the investing company. Driving investments are characterized by a strong strategic rationale and tight operational links. Enabling investments are also made primarily for strategic reasons, but the operational links are loose. Emergent investments which are characterized by tight operational links, have little current - but significant potential - strategic value. Passive investments offering few potential strategic benefits and only loose operational links, are made primarily for financial reasons, Passive corporate VC investments dry up in a down economy, but enabling and driving investments usually have more staying power. That's because their potential returns are primarily strategic, not financial. In other words, they can foster business growth. Emergent investments may make sense even in a weak market because of their potential strategic value - that is, their ability to help companies identify and spark the growth of future businesses.
University-industry research collaborations have been key to a continued
high degree of technological innovation in medicine. Recently, however, critical
questions have been posed about the potential negative aspects of highly productive
means of encouraging innovation. Concerns center on blurring roles between
academic research and the commercial world and the implications of universities'
newfound readiness to benefit financially from their intellectual property.
The roles of both parties are often inadequately captured by considering members
of university faculties as single-mindedly devoted to the advancement of fundamental
knowledge and industrial firms as mere developers of university research.
Rather, medical innovation depends on extensive interactions between universities
and industry, with knowledge and technology transfer flowing in both directions.
These interactions have had important public health and economic benefits.
Yet, there is a risk to the university-industry relationship if the cultural
and ethical principles of one partner overwhelm those of the other. Therefore,
universities and industry need to maximize the upsides of collaboration and
minimize the downsides by means of internal organizational change as well
as formation of new models of collaboration, such as intellectual partnerships
or virtual research organizations. This article reviews the numerous institutional
patterns of innovation and draws implications for organizational and public
policies.
For all its success in ‘globalizing’ regional development, the Global Production Network (GPN) approach has arguably failed to account for the role of finance in the dynamics of the global economy and regional development. This lacuna is significant as finance is arguably even more globalised and networked than production. To address this gap the paper distills the concept of the Global Financial Network (GFN) from financial geography and related scholarship, with advanced business services, world cities, and offshore jurisdictions at the centre. Interactions between the GPN and the GFN are discussed, focusing on the financing and financializing of GPNs and the co-evolution of globalization and financialisation. Integrating finance into GPN entails more than a simple extension of the GPN approach; it would also enrich it conceptually, and enable it methodologically and empirically.
This article presents research based on a case study of Bern University Hospital and the Greater Bern Area that analyses the hospital's influence on innovation in the regional medical device industry. The study draws upon the concept of sectoral innovation systems enlarged with a space-oriented model of agents' innovation-related behaviour. Its main data stem from semi-structured interviews with representatives from regional companies and the hospital. The findings confirm the systemic character of innovation in medical technology and the role of university hospitals as the main functional source of medical device innovation. At the inception of the medical device industry, innovations were implemented in a regional setting, but with the maturation of the industry, this setting has yielded to an almost global setting for innovation. This international setting became prevalent largely due to the marketing considerations of the industry, showing that from an industrial management point of view, product innovation and the diffusion of innovation are heavily interlinked activities. The article concludes that the hospital's relevant influence at a regional level lies not in the present but in the past, when timely innovative impulses from physicians enabled this regional industry's successful participation in the emerging medical device sector.
Today, financial activities become more and more integrated at a global scale. Nevertheless, SMEs have no access to these circuits. Consequently, one can ask how do they find their equity capital? This paper presents the concept of ‘proximity capital’ which articulates informal capital and proximity relations between demander and supplier of capital. A typology of spatial forms of financial circuits of industrial activities is built by contrasting proximity capital and financial cores which link the largest firms and banks together.
Literature on intrapreneurship has primarily focused on an optimistic "out of the box" thinking, with an individualistic, non-programming view. This paper proposes a contingent and historical approach, from the industrial revolution, linking the organizational contexts of innovation and intrapreneurship development. From this perspective, instrapreneurship is not only a capability, bt a process that can reveal the gaps within an organization.
Innovation, as a concept, was introduced by Schumpeter to denote the introduction of five kinds of possible new approaches by entrepreneurs. The concepts of entrepreneurship and innovation have long been disregarded in static mainstream economics. Due to the acceptance of complexity and uncertainty, Schumpeter's theory is more difficult to model for policy purposes. Today, apart from mainstream economics, in particular Institutional Economics and Evolutionary Economics emphasize the relevance of structures and contexts, although not denying the decisive role of individual decision-making. During the last few decades, economic development and technology have shaped new international contexts for human economic activities and have altered our views on economic, political and cultural issues. Innovation theory teaches us that policies enhancing the development of “creative and innovative regions” are difficult to realize. Nevertheless, it is worth trying.
The concept of Regional Systems of Innovation (RSI) has recently become popular among academics of various disciplines. RSI results from a territorially embedded institutional infrastructure and a production system. The central idea is that the innovative performance of an economy depends on the innovative capabilities of firms and research institutions, and on the ways they interact with each other and public institutions. In this paper, discussion is structured around four key questions: (1) From which theoretical perspectives has the concept of RSI originated?; (2) Does this concept derive from other forms of industrial organization?; (3) Can different forms of RSI exist?; (4) What does the RSI concept fail to address?
When Japanese competition forced the U.S. semiconductor industry into crisis during the mid-1980s, most observers predicted the demise of Silicon Valley. Yet the region9s economy is once again flourishing. By building on the dense networks of social relationships which were created and then abandoned by the established semiconductor firms, a new wave of semiconductor start-ups is creating a new Silicon Valley—one which fosters reciprocal innovation among networks of specialist producers. However, the Silicon Valley economy remains vulnerable. While today9s producers are better organized to respond to volatile markets and technologies than their predecessors, they have yet to recognize the social basis of their dynamism and create local institutions which allow them to respond systematically to shared challenges.
Science-based innovation is realized through a triple helix of university-industry-government relations. Interaction among triple helix actors in the prototypical high-tech regions, Route 128 and Silicon Valley, led to creation of the venture capital firm, science park and technology transfer office. These organizational mechanisms constitute an ‘assisted linear model’ for translation of research results with commercial potential into use either in existing firms or start-ups. Although visible end products such as science parks attracted early attention, second-mover regions have gained a sophisticated awareness of the efficacy of linking research and transfer in embedded projects as an objective of innovation policy. Copyright , Beech Tree Publishing.
Opinion leaders are the people in a social network who have the greatest influence on other people's acknowledgment or adoption of products/services in the diffusion process of technological innovation. In this research, we investigate which opinion leader is the best marketing choice in terms of diffusion speed and maximum cumulative number of adopters, using a social network approach and threshold model. On the basis of the simulation result, we find that opinion leaders with high sociality are the best ones for fast diffusion, whereas those with high distance centrality are the best ones for the maximum cumulative number of adopters. Moreover, we conclude that the characteristics of effective opinion leaders selected as initial adopters could vary depending on the characteristics of the social network and type of innovation. Finally, we find that opinion leaders affect the diffusion process only when the percentage of initial adopters reaches a critical mass.
During the past two decades, interdisciplinary oriented entrepreneurship research focused increasingly on spatial aspects of entrepreneurial activities and support policies. This paper takes stock of central themes in entrepreneurship research at and across different geographic scales, the preferred sources of data and information as well as methodological approaches. It sets out to discuss the shifting interest of research over time and to sketch out theoretical and methodological challenges for further research. This paper is based on a review of 18 international journals in small business and entrepreneurship research, economic geography, regional economics and neighbouring sciences for the period 1990–2007. Altogether, 348 relevant articles were identified, read and classified. The analysis reveals that the entrepreneur's socio-spatial contexts in which they operate on a daily basis are still absent from much of the entrepreneurship debate. We suggest intensifying research efforts on the linkage between entrepreneurial activities and localities in order to reach a better understanding of the everydayness of entrepreneurship.
Case studies are a common way to do qualitative inquiry. Case study research is neither new nor essentially qualitative. Case study is not a methodological choice but a choice of what is to be studied. If case study research is more humane or in some ways transcendent, it is because the researchers are so, not because of the methods. By whatever methods, we choose to study the case. We could study it analytically or holistically, entirely by repeated measures or hermeneutically, organically or culturally, and by mixed methods--but we concentrate, at least for the time being, on the case. The focus in this chapter is a qualitative concentration on the case. The name "case study" is emphasized by some of us because it draws attention to the question of what specially can be learned about the single case. That epistemological question is the driving question of this chapter: What can be learned about the single case? I will emphasize designing the study to optimize understanding of the case rather than to generalize beyond it. (PsycINFO Database Record (c) 2012 APA, all rights reserved)
The paper opens with a redefinition of the urban question in terms of the logic of industrialization. It is shown how processes of vertical and horizontal disintegration lead to increasing external economies of scale, and how these then translate out into a basic urban dynamic. These same processes are susceptible to reversal, with vertical and horizontal integration as the result. This reversal intersects with a series of other processes (linkage changes, scale adjustments, deskilling, and so on) leading frequently to industrial decentralization and dispersal. An attempt is made to show how the structures of production and work are expressed in (and are at the same time dependent on) the peculiar forms of residential and social activity that occur in the modern metropolis. The paper concludes with a brief allusion to the political significance of the urban question as redefined.
In focusing on regional development and industrialization, this article highlights three main themes: the relevance to developing countries of the new industrial district concept; the apparent continued need to theorize agglomerated industrial growth; and the relevance of agricultural development to local and regional industrial development. It concludes that the new industrial district concept is not relevant to understanding industrialization in the peripheral regions of developing countries and that despite the introduction of decentralization policies, local industrial development will, as before, very largely depend on central government resource allocation, the stability of government and the role played by large and medium scale enterprises, including Multi-National Corporations (MNCs). It is also argued that without special efforts to develop agriculture, local and regional industrial development are less likely to occur.
Explores the significance of innovative milieus in regional economic development. Several approaches to the concept of milieu are considered- including micro-analytical, cognitive, and organizational approaches - but generally the concept of an innovative milieu suggests that territories are not merely supports of economic activity, as is often assumed, but the grouping together of economic players and resources that enables development processes. This concept is significant because it explains how regions have unexpectedly been able to autonomously develop their economies. Typically, an innovative milieu is successful if it is able to stimulate the local economy, create an innovation dynamic based on territory, and build up a network of new enterprises. In addition to having organized and linked economic, cultural, and technological structures, the innovative milieu is capable of opening up to the resources and opportunities of the outside world. Thus, territory is constructed rather than an a priori given, and this opens up valuable new opportunities for regional policy. Since interaction logic and a collective learning dynamic are common to all innovative milieus, regional policymakers can adapt organizational approaches and learning processes to a region to initiate the building up process. The territorial dimension of industry should be central to the study of innovation processes, especially for its usefulness to regional policy. (CJC)
Compares the organization of regional economies, focusing on Silicon Valley's thriving regional network-based system and Route 128's declining independent firm-based system. The history of California's Silicon Valley and Massachusetts' Route 128 as centers of innovation in the electronics indistry is traced since the 1970s to show how their network organization contributed to their ability to adapt to international competition. Both regions faced crises in the 1980s, when the minicomputers produced in Route 128 were replaced by personal computers, and Japanese competitors took over Silicon Valley's market for semiconductor memory. However, while corporations in the Route 128 region operated by internalization, using policies of secrecy and company loyalty to guard innovation, Silicon Valley fully utilized horizontal communication and open labor markets in addition to policies of fierce competition among firms. As a result, and despite mounting competition, Silicon Valley generated triple the number of new jobs between 1975 and 1990, and the market value of its firms increased 1 billion for the same time period. From analysis of these regions, it is clear that innovation should be a collective process, most successful when institutional and social boundaries dividing firms are broken down. A thriving regional economy depends not just on the initiative of individual entrepreneurs, but on an embedded network of social, technical, and commercial relationships between firms and external organizations. With increasingly fragmented markets, regional interdependencies rely on consistently renewed formal and informal relationships, as well as public funding for education, research, and training. Local industrial systems built on regional networks tend to be more flexible and technologically dynamic than do hierarchical, independent firm-based systems in which innovation is isolated within the boundaries of corporations. (CJC)