- Email: [email protected]
The Associational Economy: Firms, Regions and Innovation
1146
Book reviews
explains the microdynamics of technical change. The second part of the book applies this basic conceptual framework to analysing the effects of ICT technologies in inducing structural and organisational changes in Europe. Other recent work, notably Arora et al. (2001) have pointed to the growing importance of intermediate technology markets, and the impact of these markets on organisational change, particularly in the division of innovative labour and the diffusion of technology in general and therefore on economic growth. In many respects, their arguments are similar to those of Professor Antonelli. Academic convergence of this sort is re-assuring as it is rare. They differ, however, in where they lay the emphasis. Arora et al. put more stress on the intermediate nature of technological change (the extent of public good nature using Antonelli’s terminology). In contrast, Antonelli puts more emphasis on the local and tacit dimensions of technological change. Accordingly, his book has much to say about the spatial dynamics of technical change. Antonelli’s book successfully combines the micro with the macro in our understanding of technological change: so, for example, he has much to say about why technological change is clustered and localised while at the same time being able to point to the effects of genericness of technologies such as ICT. With the benefit of hindsight, this also opens up a debate about what is really important for long-lasting improvements to the quality of life due to technological change: is it the effects of the generic or public good nature of technological change, or is it the other organisational changes induced by the technological change which cannot somehow be undone? This question has some relevance for the immediate future. While nobody expects ICT to go away, it is not clear which sorts of organisational changes induced by them are going to stay. Working through Antonelli’s argument one can gain insights into some crucial and important issues in the area of technological change. Two issues struck me as being particularly interesting for those of us interested in processes of technology generation. Can incremental and radical innovations be explained by similar mechanisms? The book suggests the answer to this is no, since the two kinds of innovations have different roles for tacit and codified knowledge. It also suggests that the former are locally more bounded. Should externalities refer to unintended outcomes or
also encompass co-operative arrangements for generating technology? The book suggests the answer to this should be both. This is an interesting idea as co-operative arrangements are often thought of as comprising elements of the innovative system with a role for institutions and not normally treated as externalities. By treating them as externalities, it is possible to give the role of institutions in technological change a causal, and not merely descriptive, role. A methodologically unusual feature of the book is its attempt to use both partial equilibrium analysis and disequilibrium analysis. Purists may argue that this is impossible, but Antonelli has attempted to do this and one consequence of this novelty is that the technical level of the book is more demanding than many other books on technical change. A demand however, that is certainly worth pursuing for the new insights it yields. Reference Arora, A., Fosfuri, A., Gambardella, A., 2001. Markets for Technology: The Economics of Innovation and Corporate Strategy. MIT Press, USA.
Suma S. Athreye Faculty of Social Sciences The Open University, Walton Hall Milton Keynes MK7 6AA, UK Tel.: +44-1908-65-45-56; fax: +44-1908-65-44-88 E-mail address: [email protected] (S.S. Athreye) PII: S 0 0 4 8 - 7 3 3 3 ( 0 2 ) 0 0 1 2 2 - 1
The Associational Economy: Firms, Regions and Innovation Philip Cooke and Kevin Morgan (Eds.), Oxford University Press, Oxford, 1999, 247 pp., £42.50/£14.99, ISBN 019-829018-7 This book adds to a flourishing literature from recent years about innovation, innovation systems and policy at different levels of spatial aggregation to which the authors of this book have been among the most central contributors. While much of the previous literature on innovation systems has focused on the national level, this book argues that the regional level
Book reviews
is equally or more relevant. This point has also been made in another recent volume, that of Braczyk et al. (1998), to which one of the authors of this book also has contributed. While that volume consisted mainly of case studies, the book under review here adds more theoretical and methodological reflection, as well as a more systematic discussion of policy aspects. The book consists of eight chapters and an introduction. Four of these are case studies of regional development drawn from Germany, Italy, the UK and Spain. The German region is Baden-Würtenberg, commonly acknowledged as one of the most successful regions in Europe and home to a large number of competitive and technologically advanced mechanical engineering firms. In contrast, the Italian case is the well known “industrial district” of Emilia Romagna with its many small and medium-sized firms in traditional sectors of industry. The two remaining regions; Wales in the UK and the Basque region in Spain, differ from the above by a stronger degree of cultural homogeneity and longer history as separate administrative units. In each case the authors start by presenting the national system of innovation and the role of regions in the national governance structure, followed by an analysis of the level of economic development, economic structure (including firm size), industrial specialisation and the most important economic challenges faced by the region in recent decades. A lot of emphasis is placed on how closely knit the firms in a region are, how much they collaborate, the role of “intermediary” organisations, the broader regional infrastructure and the role of the regional government in fostering such local interaction. Although all four regions have faced important challenges from changes in demand, competition and recent globalisation trends, these challenges appear to have been most severe in Wales and the Basque country, specialised in coal and heavy mechanical engineering, respectively. A central argument in the book is that the ability of a region to cope with such challenges increasingly depends on the extent of collaboration between its firms, and the ability of regional governments in supporting such collaboration (or “association” to use the term suggested by the authors). The theoretical arguments supporting this perspective and a discussion of the implications are laid out in the three first and the last chapter in the book. The first chapter, devoted to the institutions of innovations,
1147
reviews the contribution from Schumpeter and the literature that followed. With reference to recent innovation research it is concluded that a perspective that exclusively focuses on firms is too narrow, and that a proper understanding of innovation also requires an analysis of the interaction between firms and between firms and their environments. Chapter two looks at the literature of firm governance, including the role of workers and other “stakeholders”, and the emergence of less hierarchical, networked forms of organisation. In chapter three and in the concluding chapter these issues are linked in more detail to the regional level. The authors distinguish between two different aspects, “regionalisation”, which they identify with the political–administrative system of governance, and “regionalism”, which they associate with the “collective social order” of the region, related to factors such as culture, collaboration, trust and “social capital”. Although both aspects play a role in the analysis, it is the latter that gets most attention in the author’s account. They contend that a “collective social order” that induces firms to collaborate—to display “associational” behaviour—is more conducive to innovation, broadly defined, than other arrangements (or systems), and they attempt to verify this through their discussion of the empirical evidence presented in the book. In contrast to some previous literature on the subject, which tends to see such collective social orders as deeply routed in long-run historical development (and predetermined by it), the authors argue—with reference to empirical evidence—that such collaborative behaviour can in fact develop over much shorter time-spans, and that policy may play a very important role in such processes. All in all, I enjoyed reading this book. What I particularly liked was the breadth of the theoretical discussion, and the attempt to draw on insights from different disciplines such as evolutionary economics, political science, economic sociology, organisational science and business studies. However, although I sympathise with the authors’ approach, I am not sure that all mysteries surrounding the agglomeration phenomenon are resolved once and for all by their analyses. In particular I found the discussion of the role of knowledge in agglomeration (and knowledge and information more generally) much too brief. I was also surprised to see that there was no reference to the important work by Carlsson and Stankiewicz (1991) on technological and
1148
Book reviews
spatial agglomeration (that, to me, appears to be very close to the authors’ approach). On a more technical aspect, I hope that the authors in future work will take care to always include page numbers when they reproduce passages of text from other sources. Moreover, it was not quite clear to me what the authors mean with references such as “Schon (circa 1960s)”. Such minor issues left aside, this is a very good book on an important issue, and it deserves a broad readership. References Braczyk, H.J. et al., 1998. Regional Innovation Systems. UCL Press, London.
Carlsson, B., Stankiewicz, R., 1991. On the nature, function and composition of technological systems. Journal of Evolutionary Economics 1, 93–118.
Jan Fagerberg Centre for Technology Innovation and Culture, University of Oslo P.O. Box 1108, Blindern, 0317 Oslo, Norway Tel.: +47-22840601; fax: +47-22840610 E-mail address: [email protected] (J. Fagerberg) PII: S 0 0 4 8 - 7 3 3 3 ( 0 2 ) 0 0 1 2 3 - 3
Book reviews
explains the microdynamics of technical change. The second part of the book applies this basic conceptual framework to analysing the effects of ICT technologies in inducing structural and organisational changes in Europe. Other recent work, notably Arora et al. (2001) have pointed to the growing importance of intermediate technology markets, and the impact of these markets on organisational change, particularly in the division of innovative labour and the diffusion of technology in general and therefore on economic growth. In many respects, their arguments are similar to those of Professor Antonelli. Academic convergence of this sort is re-assuring as it is rare. They differ, however, in where they lay the emphasis. Arora et al. put more stress on the intermediate nature of technological change (the extent of public good nature using Antonelli’s terminology). In contrast, Antonelli puts more emphasis on the local and tacit dimensions of technological change. Accordingly, his book has much to say about the spatial dynamics of technical change. Antonelli’s book successfully combines the micro with the macro in our understanding of technological change: so, for example, he has much to say about why technological change is clustered and localised while at the same time being able to point to the effects of genericness of technologies such as ICT. With the benefit of hindsight, this also opens up a debate about what is really important for long-lasting improvements to the quality of life due to technological change: is it the effects of the generic or public good nature of technological change, or is it the other organisational changes induced by the technological change which cannot somehow be undone? This question has some relevance for the immediate future. While nobody expects ICT to go away, it is not clear which sorts of organisational changes induced by them are going to stay. Working through Antonelli’s argument one can gain insights into some crucial and important issues in the area of technological change. Two issues struck me as being particularly interesting for those of us interested in processes of technology generation. Can incremental and radical innovations be explained by similar mechanisms? The book suggests the answer to this is no, since the two kinds of innovations have different roles for tacit and codified knowledge. It also suggests that the former are locally more bounded. Should externalities refer to unintended outcomes or
also encompass co-operative arrangements for generating technology? The book suggests the answer to this should be both. This is an interesting idea as co-operative arrangements are often thought of as comprising elements of the innovative system with a role for institutions and not normally treated as externalities. By treating them as externalities, it is possible to give the role of institutions in technological change a causal, and not merely descriptive, role. A methodologically unusual feature of the book is its attempt to use both partial equilibrium analysis and disequilibrium analysis. Purists may argue that this is impossible, but Antonelli has attempted to do this and one consequence of this novelty is that the technical level of the book is more demanding than many other books on technical change. A demand however, that is certainly worth pursuing for the new insights it yields. Reference Arora, A., Fosfuri, A., Gambardella, A., 2001. Markets for Technology: The Economics of Innovation and Corporate Strategy. MIT Press, USA.
Suma S. Athreye Faculty of Social Sciences The Open University, Walton Hall Milton Keynes MK7 6AA, UK Tel.: +44-1908-65-45-56; fax: +44-1908-65-44-88 E-mail address: [email protected] (S.S. Athreye) PII: S 0 0 4 8 - 7 3 3 3 ( 0 2 ) 0 0 1 2 2 - 1
The Associational Economy: Firms, Regions and Innovation Philip Cooke and Kevin Morgan (Eds.), Oxford University Press, Oxford, 1999, 247 pp., £42.50/£14.99, ISBN 019-829018-7 This book adds to a flourishing literature from recent years about innovation, innovation systems and policy at different levels of spatial aggregation to which the authors of this book have been among the most central contributors. While much of the previous literature on innovation systems has focused on the national level, this book argues that the regional level
Book reviews
is equally or more relevant. This point has also been made in another recent volume, that of Braczyk et al. (1998), to which one of the authors of this book also has contributed. While that volume consisted mainly of case studies, the book under review here adds more theoretical and methodological reflection, as well as a more systematic discussion of policy aspects. The book consists of eight chapters and an introduction. Four of these are case studies of regional development drawn from Germany, Italy, the UK and Spain. The German region is Baden-Würtenberg, commonly acknowledged as one of the most successful regions in Europe and home to a large number of competitive and technologically advanced mechanical engineering firms. In contrast, the Italian case is the well known “industrial district” of Emilia Romagna with its many small and medium-sized firms in traditional sectors of industry. The two remaining regions; Wales in the UK and the Basque region in Spain, differ from the above by a stronger degree of cultural homogeneity and longer history as separate administrative units. In each case the authors start by presenting the national system of innovation and the role of regions in the national governance structure, followed by an analysis of the level of economic development, economic structure (including firm size), industrial specialisation and the most important economic challenges faced by the region in recent decades. A lot of emphasis is placed on how closely knit the firms in a region are, how much they collaborate, the role of “intermediary” organisations, the broader regional infrastructure and the role of the regional government in fostering such local interaction. Although all four regions have faced important challenges from changes in demand, competition and recent globalisation trends, these challenges appear to have been most severe in Wales and the Basque country, specialised in coal and heavy mechanical engineering, respectively. A central argument in the book is that the ability of a region to cope with such challenges increasingly depends on the extent of collaboration between its firms, and the ability of regional governments in supporting such collaboration (or “association” to use the term suggested by the authors). The theoretical arguments supporting this perspective and a discussion of the implications are laid out in the three first and the last chapter in the book. The first chapter, devoted to the institutions of innovations,
1147
reviews the contribution from Schumpeter and the literature that followed. With reference to recent innovation research it is concluded that a perspective that exclusively focuses on firms is too narrow, and that a proper understanding of innovation also requires an analysis of the interaction between firms and between firms and their environments. Chapter two looks at the literature of firm governance, including the role of workers and other “stakeholders”, and the emergence of less hierarchical, networked forms of organisation. In chapter three and in the concluding chapter these issues are linked in more detail to the regional level. The authors distinguish between two different aspects, “regionalisation”, which they identify with the political–administrative system of governance, and “regionalism”, which they associate with the “collective social order” of the region, related to factors such as culture, collaboration, trust and “social capital”. Although both aspects play a role in the analysis, it is the latter that gets most attention in the author’s account. They contend that a “collective social order” that induces firms to collaborate—to display “associational” behaviour—is more conducive to innovation, broadly defined, than other arrangements (or systems), and they attempt to verify this through their discussion of the empirical evidence presented in the book. In contrast to some previous literature on the subject, which tends to see such collective social orders as deeply routed in long-run historical development (and predetermined by it), the authors argue—with reference to empirical evidence—that such collaborative behaviour can in fact develop over much shorter time-spans, and that policy may play a very important role in such processes. All in all, I enjoyed reading this book. What I particularly liked was the breadth of the theoretical discussion, and the attempt to draw on insights from different disciplines such as evolutionary economics, political science, economic sociology, organisational science and business studies. However, although I sympathise with the authors’ approach, I am not sure that all mysteries surrounding the agglomeration phenomenon are resolved once and for all by their analyses. In particular I found the discussion of the role of knowledge in agglomeration (and knowledge and information more generally) much too brief. I was also surprised to see that there was no reference to the important work by Carlsson and Stankiewicz (1991) on technological and
1148
Book reviews
spatial agglomeration (that, to me, appears to be very close to the authors’ approach). On a more technical aspect, I hope that the authors in future work will take care to always include page numbers when they reproduce passages of text from other sources. Moreover, it was not quite clear to me what the authors mean with references such as “Schon (circa 1960s)”. Such minor issues left aside, this is a very good book on an important issue, and it deserves a broad readership. References Braczyk, H.J. et al., 1998. Regional Innovation Systems. UCL Press, London.
Carlsson, B., Stankiewicz, R., 1991. On the nature, function and composition of technological systems. Journal of Evolutionary Economics 1, 93–118.
Jan Fagerberg Centre for Technology Innovation and Culture, University of Oslo P.O. Box 1108, Blindern, 0317 Oslo, Norway Tel.: +47-22840601; fax: +47-22840610 E-mail address: [email protected] (J. Fagerberg) PII: S 0 0 4 8 - 7 3 3 3 ( 0 2 ) 0 0 1 2 3 - 3