Innovation, Space, and Diversity
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Original versionInnovation, Space, and Diversity by Marte Cecilie Wilhelmsen Solheim, Stavanger : University of Stavanger, 2017 (PhD thesis UiS, no. 327)
Background This PhD thesis aims at combining different perspectives from the literature on organizational theory, innovation, and economic geography and addresses how firms1 communicate and connect within the contexts of innovation processes. The literature concerned with organizational theory has had a tendency to overlook the significance of external surroundings and rather overemphasize within-firm relations and capabilities2. On the other hand, the literature on economic geography sometimes fails to consider that firms are heterogeneous leading to studying firms in a static manner. The thesis aims at contributing to the existing body of literature that connects these approaches by looking at how firms organize their innovation activities in relation to their contexts and how firms create external knowledge linkages. This in turn reflects firms’ internal competences, as firms’ internal capabilities guides firms’ ability to find new knowledge, connect to partners and innovate, hence their absorptive capacity (Cohen and Levinthal 1990, 67). At the same time, the external environment influences firms’ internal competence. The underlying mechanism is that people are inseparable from their environments because “environments only exist through the people behaving in them knowing them” (Schneider 1987, 439). One premise is thus that innovation is an interactive process where people with different competence meet in order to solve problems (Østergaard, Timmermans, and Kristinsson 2011, Bathelt, Malmberg, and Maskell 2004, Lundvall 1992). There is a need for increased understanding of how these interactive processes are organized, which actors are involved, and how these activities play out in space, gaining such understanding by both considering firms’ internal and external knowledge and competence. One example is that having diverse human resources could lead to reaching an equally diverse marketplace (Cox 2001) and access to broader knowledge, which in turn is important for innovation (Laursen and Salter 2006). This PhD aims at gaining insight on the interdependencies of firms and external knowledge linkages in innovation, particularly focusing on the role of diversity. The overall research question is: how does diversity and space affect innovation? Research Design: Data and Methods The four individual papers take advantage of different data and methods. Paper I and III draws on large and unique datasets that consist of public enterprise registers gathered on an annual basis covering all employer firms and all workers in private sectors in Norway. These data are often referred to as Linked Employer – Employee Data (LEED). The LEED are then merged with an extended version of the Community Innovation Survey (CIS). Paper II builds on the survey data from approximately 500 firms in Norway with more than ten employees, covering all sectors and regions. Paper IV takes advantage of a panel data set consisting of 1500 firms in the Norwegian upstream oil and gas industry. All of the four individual papers aim at measuring different aspects of innovation at different stages in the innovation process. The simplified definition of innovation is: a “new idea, device or method” or “the act or process of introducing new ideas, devices or methods” (Merriam-Webster 2016). Innovation is both the process of e.g. developing new markets and/or new products, or new methods of production, as well as the outcome: e.g. increase in value added, or a new product. Although innovation is not a chronological process without any setbacks or loops (Kline and Rosenberg 1986), the innovation process goes through stages that are distinct in time, i.e. patenting, product and process innovations, and launching these product in markets and an increase in revenue at the bottom line caused by innovations. In Paper I, innovation is measured in three ways: firstly by the decision to engage in systematic development work, secondly by patent, and thirdly by product and process innovation. Paper II measures innovation by product innovation (and new-to-market product innovation) and process innovation (and new-to-industry process innovation). Paper III measures innovation by looking at whether firms have launched goods and/or services in international markets. Paper IV measures the effects of industrial agglomeration on firms’ value added, where increased innovation is an important underlying factor leading to increased productivity for firms that are geographically co-located. Hence, all of the four individual papers offer a distinct and different outlook on innovation, including product innovation, effects on productivity, and new processes or underlying mechanisms of collaboration and market entry. Various econometric analyses are employed in the different papers, and mostly similar techniques are used. Results All of the four individual papers demonstrate that different aspects of diversity and space affect innovation. The results from paper I demonstrate that exploration (patent output) responds differently to the composition of firms’ human resource bases than exploitation (new products & production processes) does. Moreover, the results demonstrate that exploration is dependent on diversity of human resources, whilst exploitation is more dependent on similar capabilities. Investments in innovation are important moderators of these effects. Paper II and Paper III investigates the role of foreign workers in firms and demonstrates some of the underlying mechanisms between foreign workers, international partners and innovation/export of goods and/or services to international markets. In Paper II, we find evidence that firms with highly educated foreign workers collaborate more frequently with international partners and that there is a positive relation between having a variety of international partners and the probability of product innovation and new-tomarket product innovation (as well as new-to-industry process innovation). The results from Paper III demonstrate that firms in core, intermediate, and peripheral regions benefit from international collaboration and foreign workers in order to be present on international markets. The results stresses that firms in peripheral regions are not detached from the global economy, but are able to partake in able to tap into global economies by e.g. collaborating with international partners. Paper IV studies a particular industry, namely the upstream oil and gas industry in Norway, and finds that firms in this industry benefit from regional agglomeration through increased productivity as measured by value added. This is particularly so when firms within the same subsector are co-located. Knowledge spillovers leading to increased innovation are believed to be an important underlying factor driving agglomeration related productivity growth. Conclusions The four individual papers all demonstrate different aspects of the interdependencies between firms and their contexts while also highlighting the role of diversity. The papers demonstrate how diversity amongst actors contributes to some types of innovation, whilst other types of innovation are facilitated through similarity between actors. The results from paper I demonstrates how exploration (patent output) is more dependent on diversity in human resources, than exploitation where similarity in experience and educational background seems more important. The results from paper II demonstrates how diversity amongst workers, as measured by foreign workers, may contribute to new collaboration patterns, which in turn prove essential for product and new-to-market product innovation as well as new-to-industry process innovation. The results from paper III demonstrate that firms in core, intermediate, and peripheral regions benefit from collaborating with international partners and hiring foreign workers in order to be present on international markets. The results paint a varied picture of different dimensions of innovation in relation to different measures of diversity, but furthermore in relation to space and context. This provides an important element of not only increasing our understanding of the role of diversity in both core, intermediate, and peripheral regions, but also since past contributions have had a tendency to study globalization and diversity in cities, the results demonstrate the capability of benefitting of diversity across space. The results from paper IV demonstrate that close communication and substantial interaction between suppliers and buyers that permeate the upstream oil and gas industry proves pivotal in increasing value added. This is particularly the case when firms within the same subsector are co-located, further stressing the importance of similarity between actors.
PhD thesis in management
Has partsSolheim, Marte C.W. and Sverre J. Herstad. “On the differentiated effects of human resource diversity on organizational learning and innovation”.
Solheim, Marte C.W. and Rune Dahl Fitjar (2016) ”Foreign workers are associated with innovation, but why? International networks as a mechanism”. International Regional Science Review. DOI: 10.1177/0160017615626217
Solheim, Marte C.W. “Foreign workers and international partners as channels to international markets in core, intermediate and peripheral regions”. Published in Regional Studies, Regional Science online ahead of print 07.12.2016.
Solheim, Marte C.W. and Ragnar Tveterås. “Do firms in upstream oil and gas sectors benefit from co-location?”