Prof. David Jacobson DCU Ireland and FIT Cyprus and Kevin Heanue Rural Economy Research Centre Ireland Embeddedness and Innovation in Low and Medium Tech

Question zWhat are the patterns of “embeddedness”, and their change over time, displayed by innovative LMT firms?

Theoretical Framework zLocation and Innovation (e.g. Industrial Districts, Regional Systems of Innovation) yBut zEvolution of industrial districts; struggle for “sticky places in slippery space” (Markusen, 1996) zInverted U of embeddedness and innovation? (Uzzi, 1997; Boschma et al, 2002; Boschma, 2005)U

Innovation: Uzzi, Neoclassical, Embeddedness zUzzi (1997), Boschma et al (2002): inverted U zNeoclassical: Social embeddedness detracts from innovation zEmbeddedness: Enhances innovation ySource: Boschma (2005)

Dimensions of Innovative Processes zNetwork relationships zInteractive learning zKnowledge bases

Embeddedness zInter-firm rather than individual/social zConnections: yWith customers and suppliers, other firms, agencies, institutions yAre they local or distant; market or non- market; “shallow” or “stretched”?

Empirical Context zEU FP5 Project on PILOT zAll firms innovative, successful, over 50 employees (44 firms studied) zTwo sectors in Ireland: yFabricated Metal Products (NACE 28) and Furniture (NACE 361)

The Four Irish Firms zFURN1 Monaghan, wooden furniture mainly for export zFURN2 Meath, upholstered furniture mainly for local market zFAB1 Mayo, volume producer of high-spec components, mainly for MNCs in Ireland, in telecoms, automotive, medical equipment etc. zFAB2 Cork, stainless steel vessels and turnkey system preparation for process industries, mainly dairy and pharma in Ireland

Results: FURN1 Local or Distant Market or Non-Market Network Relations Distant: International suppliers Market & Non- Market (Trust- based rels.) Interactive Learning Local & Distant (customers) “Temporary Clusters” Knowledge Bases Local & Distant (E. Eur.) State agencies & E.E. partner

Results: FURN2 Local or DistantMarket or Non-Market Network Relations Local spec. labour. International Adapt project. Market & Non- Market (Trust- based rels.) Interactive Learning Local & Distant, agencies & S & C S & C and Market Knowledge Bases Internal, tacit, experience-based Market

Results: FAB1 Local or DistantMarket or Non-Market Network Relations Formal local networks Market based rels. with Cs Interactive Learning Mostly internal, but also S and C S & C and Market Knowledge Bases Local cluster, FAB1 moving up in VA Deep institut. base

Results: FAB2 Local or DistantMarket or Non-Market Network Relations Local Cs (MNCs) and sub-contrs. Market based rels. with Cs Interactive Learning Mostly internal, formal R&D Agency funded, links with univs. Knowledge Bases Tacit and formal, local. Also USA Internal mostly, formal

Conclusion zFURN1 & 2 support inverted U, but differently zFAB1 & 2 do not, at least not yet yIf FAB2 succeeds in accessing foreign markets it will “stretch” its embeddedness

Inverted U: Embeddedness and InnovationU