National systems of innovations, industrial clusters and constituency-building in Scotland’s electronics industry

International Journal of Entrepreneurship and Innovation Management

Volumn 1, Issue 2, 2001, Pages 241-275

  Molina, Alfonso H ^a   Kinder, Tony ^a  

^a UNIVERSITY OF EDINBURGH   (United Kingdom)

Author keywords

governance; Industrial clusters; national systems of innovation; Scottish electronics industry; socio technical constituencies; sustainability

Indexed keywords

EID: 19744369038     PISSN: 1368275X     EISSN: 17415098     Source Type: Journal    
DOI: 10.1504/IJEIM.2001.000456     Document Type: Article

References (63)

1. Lundvall [2, p.17] Also, the “broad definition of system of innovation includes all parts and aspects of the economic structure and the institutional set-up affecting learning as well as searching and exploring - the production system, the marketing system and the system of finance present themselves as sub-systems in which learning takes place”. p.12.
2. Lundvall, B.A. (1992) ‘Introduction’ in Lundvall, B.A. (Ed.) National Systems of Innovation, Pinter, London, pp.1–19.
3. A similar broad definition is given by Nelson and Rosenberg “innovation involves much more than R&D and the set of institutions that influences the technological capabilities of a nation and how these are advanced extends far beyond those that directly impinge on innovation. The character and effectiveness of a nation’s system of schooling, training and retraining not only determine the supply of skills from engineer to machine tender, but also influence the attitudes of workers to technical advance. So too do the patterns of labour - management bargaining and negotiation, dispute resolution and the degree of mutual commitment of firms and workers. Financial institutions and the way firms are governed and controlled, profoundly influence the technical activities that are feasible and that managers choose to undertake”Nelson, R. and Rosenberg, N. (1993) ‘Technical innovation and national systems’ in Nelson, R. (Ed.) National Innovation Systems. A Comparative Analysis, Oxford University Press, NY, 1993, pp.3–21. Quotation in p.13.
4. Nelson, R. (1993) ‘A retrospective’ in Nelson, R. (Ed.) National Innovation Systems. A Comparative Analysis, Oxford University Press, NY, 1993, pp.505–523.
5. Porter, M. (1990) The Competitive Advance of Nations, Macmillan, London.
6. Nelson [4, p.4] Also, Lundvall [2] equates National System of Innovation with a nation’s technological capability, as he argues that the “technological capability of a national system is rooted in processes of interactive learning”, p.301.
7. Various publications have dealt with the interrelated themes of the ‘socio-technical constituencies’ conceptual framework. In particular, see [8].
8. Molina. A. (1990) ‘Transputers and transputer-based parallel computers: socio-technical constituencies and the build up of British-European capabilities in information technology’, Research Policy, 19, pp.309–333.
9. Molina, A. (1993) ‘In search of insights into the generation of techno-economic trends; micro- and macro-constituences in the microprocessor industry’, Research Policy, Vol. 22, Nos. 5/6, pp.479–506.
10. Molina, A. (1995) ‘Socio-technical constituencies as processes of alignment: the rise of a large-scale European information technology initiative’, Technology in Society, Vol. 17, No. 4, pp.385–412.
11. Molina, A. (1996) ‘The role of The Technical in innovation and technology development: the perspective of socio-technical constituencies’, TechMaPP Working Paper Series, TechMaPP, Business Studies, The University of Edinburgh.
12. Molina, A. (1997) ‘Insights into the nature of technology diffusion and implementation: the perspective of socio-technical alignment’, Technovation, Vol. 17, Nos. 11/12, pp.601–626.
13. Klaes, M. (1997) ‘Socio-technical constituencies, game theory and the diffusion of compact disks. An inter-disciplinary investigation into the market of recorded music’, Research Policy, Vol. 25, pp.1221–1234.
14. See Molina [8] The phrase socio-technical constituency provides consistency of language in that constituency is derived from constituent-elements and the complete phrase is designed to encapsulate the evolving ensemble of all constituent-elements playing a part in the creation, production and diffusion of technologies. Note the certain similarity of this definition with Lundvall’s [2] definition of a system of innovation as “constituted by elements and relationships which interact in the production, diffusion and use of new and economically useful, knowledge …” p.2.
15. It is worth stressing that not all socio-technical constituencies will have the same mix of intra- and inter-institutional constituents as the one exemplified in the diagrams of Figure 2. For instance, some of them may be just national, some may not have any military constituent at all, etc. The variety can be infinite.
16. It is worth stressing that the central circle T in Figure 3 exclusively illustrates the fact that the central concern of socio-technical constituencies is with the analysis of technological processes. It does not mean that the technology is external to the constituency. By the same token, it is also worth noting that the layout of the figure in different circles is simply to organize the analysis and does not mean that each circle represents and isolated level of reality. Indeed, careful interpretation should make it rather obvious that the content of each of the circles actually contains the content of the inner ones. Nevertheless, it is better to make this point explicitly. Thus, Figure 3 should be taken as an effort to visualize on paper the richness and complexity of an integrated micro/macro environment. The generous use of doublepointed arrows tries to illustrate the micro/macro integration.
17. Regulation theory addresses the agent-structure issue by using Bourdieu’s concept of habitus, see Bourdieu, P. (1977) Outline of a Theory of Practice, CUP, Cambridge, p.95 and Bourdieu, P. (1971) ‘Systems of education and systems of thought’ in Young, F.D. (Ed.), Knowledge and Control, Collier-Macmillan, London, p.200. Habitus is a “matrix of perceptions, appreciations and actions”, grounded in material existence but not determined by it, avoiding reductionism by theorizing that unmet intentionality or unintended consequences of action provoke a reappraisal of dispositions. See also Robels, A.C. (1994) French Theories of Regulation and Conceptions of the International Division of Labour, St. Martins Press, London, p.17.
18. More specifically, governance includes formal and informal organizational structures and decision making steps, procedures, rules-of-thumb and routines for resource, rewards and punishment allocation. It also includes ‘mindsets’ resulting from different historical conjunctions such as crises, booms, re-organizations and so on. Governance shapes constituency-building processes, but it is also created and destroyed by them. It is critical to socio-technical alignment and central to the problem of structure and agency and, consequently, to the role of structural power relations in the development of technology. Within constituencies, governance provides a unifying theme for micro- and macro levels of social analysis. Williamson (1979) uses the term ‘governance structure’ to refer to “the institutional matrix or framework within which transactions are negotiated and executed …”, Williamson, O., (1979) ‘Transaction-cost economics: the governance of contractual relations’, The Journal of Law and Economics, pp.233–261. Quotation in p.239.
19. A number of possible situations are implied: obligatory complementarity in which the product technology requires of others to realize its contribution (e.g. product and production process). In this case, interaction and solutions demand strong expertise-based alignment, giving rise to a process of knowledge- integration; non-obligatory complementarity in which the product and other technologies may contribute to a common organizational purpose but their interaction is not a pre-condition for one or the other to work; there might or might not be a process of knowledge integration; antagonistic competitive in which the product and other technologies are disputing the same role and resources in the organization and the acceptance of one may imply total displacement of the other. The essence of this case is conflict and no knowledge integration is possible. non-antagonistic competitive in which the product and other technologies are actually or apparently addressing similar functional roles or markets but they can or are allowed to co-exist and compete in the organization; some degree of knowledge integration might conceivably be possible, although circumstances will be hardly the most propitious. In practice, the boundaries between this and the antagonistic case are seldom given - they are rather a matter of players’ perceptions, negotiating stance and, generally, approach to constituency-building.
20. The critical role of learning has received particular attention. Several categories have been proposed. Fleck’s [24] ‘learning by doing’, learning by using’, ‘diffusing by learning’, ‘learning by diffusing’ and ‘learning by trying’. The first four types of learning closely relate to the role of accumulated experience and incremental innovations, either in the process of production or in the process of utilization of a technology. The relevant variable in ‘learning by doing’ is the cumulated production volume which would translate into ‘ diffusion by learning’, that is, the process whereby improvement in the characteristics of a technology enhances the scope of its adoption. On the other hand, the ‘learning via diffusion’, that is, the process whereby the increased adoption of a technology paves the way for improvement in its characteristics, Sahal [22]. Fleck’s [24] ‘learning by trying’ is different in that it is related to the implementation of configurational technologies rather than to incremental innovations to an already functioning technology. In this case, “improvements and modifications have to be made to the constituent components before the configuration can work as an integrated entity”, p.638.
21. Arrow, K.J. (1962) ‘The economic implications of learning by doing’, Review of Economic Studies, Vol. 29, pp.155–173.
22. Sahal, D. (1981) Patterns of Technological Innovation, Addison-Wesley, Reading, Mass.
23. Rosenberg, N. (1982) ‘Learning by Using’ in N. Rosenberg Inside the Black Box - Technology and Economics, Cambridge University Press, N.Y.
24. Fleck, J. (1994) ‘Learning by trying: the implementation of configurational technology’, Research Policy, Vol. 23, pp.637–652.
25. Nonaka, I. and Takeuchi, H. (1995) The Knowledge-Creating Company, OUP, Oxford.
26. Rosenberg, N. (1982) Inside the Black Box - Technology and Economics, Cambridge University Press, N.Y., p.3.
27. Dretske, F.I. (1981) Knowledge and the Flow of Information, Blackwell, Oxford.
28. Yuasa, Y. (1987) The Body: Toward and Eastern Mind-Body Theory, State University of New York Press, New York, p.68. See also Sivin, N. ‘On the limits of empirical knowledge in Chinese and Western Science’ in Biderman, S. and Scharfstein, B. (1989) Rationality in Question, Brill, N.Y., pp.165–189.
29. Fransman, M. (1993) ‘Information, knowledge, vision and theories of the firm’, JETS Paper, Institute for Japanese-European Technology Studies, University of Edinburgh.
30. Gibbons, M., Limoges, C., Nowotny, H. Schwartzman, S.P. and Trow, M. (1994) The New Production of Knowledge, Sage, London.
31. Badaracco, J.L. (1991) The Knowledge Link, Harvard Business School Press, Massachusetts. He argues that increasingly knowledge alliances are extending firms’ ability through deep relationships to translate embedded knowledge into migratable forms.
32. Lazonick, W. ‘Learning and the dynamics of international competitive advantage’, in Thomson, R. (Ed.), (1993) Learning and Technological Change, Macmillan, London, pp.172–197 and Lazonick, W. (1990) Competitive Advantage on the Shop Floor, HUP, London and Gospel, H.F. (Ed.) (1991) Industrial Training and Technological Innovation, Routledge, London.
33. Argyris, C. and Schon, D.A. (1978) Organizational Learning, Addison-Wesley, Reading MA and, more recently, Argyris, C. (1992) On Organizational Learning, Blackwell, Oxford.
34. Hedberg, B. ‘How organizations learn and unlearn’, in Nystrom P.C. and Starbuck, W.H. (Eds.) (1981) Handbook of Organizational Design, OUP, New York, pp.3–27.
35. Maruyama, M. (1963) ‘The second cybernetics: deviation amplifying mutual causation processes’, in American Scientist, No. 51, pp.64–179.
36. Maturana, H. and Varela, F.J. (1987) The Tree of Knowledge, Shambhala, Boston, Massachusetts. Self-referencing emphasizes the endogeneity of knowledge construction relevant to a particular firm within its own boundaries and using its own tacit knowledge context: an example is the ‘HP-way’ in Hewlett Packard.
37. Von Krogh, G. and Roos, J. (1995) Organizational Epistemology, Macmillan, London. Languaging stresses the dynamic nature of knowledge generation within a learning organization. In particular ‘polythetically’ arriving at customized manuals and procedures as a result of discourse, as opposed to the ‘monothetic’ - and linear - acceptance of meaning from (for example) the suppliers of technology.
38. Fleck, L. (1979) The Genesis and Development of Scientific Fact, University of Chicago Press, Chicago, p.42 states: “Cognition is the most socially-conditioned activity of man and knowledge is the paramount social creation”.
39. Nonaka and Takeuchi [25] Amplification occurs in systems which ‘emphasize the position’ and rapidly make ‘ negative’ learning redundant; in such systems, middle management, they argue, plays an internal ‘gate-keeper’ role.
40. Cusumano, M.A. and Selby, R.W. (1996) Microsoft Secrets, Harper Collins, London, Ch. 6. Characteristics defining Microsoft as a learning organization include: learning from the past (project post mortems, process audits, cross-group debriefings), encouraging user feedback (de-bugging using customer focus groups, best practice bench marking), integrating product service and product (positively using complaints to improve design) and cross-product linkages.
41. Whilst globalization is a tendency rather than a matured process, it vastly expands markets and therefore the division of labour. In turn, this enhances interdependency: no manufacturing regional economy is self-sufficient, nor contains the purchasing power to sustain a post-Fordist regime of accumulation: the latter is necessarily export-orientedSee Reich R.B. (1993) The Work of Nations, Simon & Schuster, London, p.84 passim.
42. Lee, C. (1995) Scotland and the United Kingdom, Manchester University Press, Manchester.
43. Ashcroft, B. and Love, J.H. (1993) Take-overs, Mergers and the Regional Economy, Edinburgh University Press, Edinburgh.
44. SE (1996) Scotland: Europe’s Center of Electronics Excellence, SE, Glasgow.
45. SE (1995) Electronics and Support Companies in Scotland, SE, Glasgow.
46. SE (1995) North American Companies in Scotland, SE, Glasgow.
47. Procurement budgets for the Scottish industrial sector is valued at £4bn pa, 12% of which is locally expended, i.e. £500m.
48. This confirms Marshall’s conclusion: the larger the ‘magnet’ plant the lower the local linkage. Marshall N.J. ‘Industrial change, linkages and regional development’, in Lever, W.F. (Ed.) (1987) Industrial Change in the United Kingdom, Longman, Essex. Ch. 8. This is less true when STCs exist to maximize local linkage and the product (e.g. car making) suits this more than, for example, semiconductors, see Garrahan, P. and Stewart, P. (1992) The Nissan Enigma: Flexibility at Work in a Local Economy, Mansell, London for an analysis of microclustering around a single plant.
49. SPEED (1993) Scottish Council for the Development of Industry, Glasgow.
50. Kinder’s research looked in detail at four inward investing companies (together these companies have a £650m turnover and employ 3,412 staff); conducted a quantitative survey of 84 indigenous companies and undertook a qualitative study in eleven of them. Of the four FDI companies, two were Japanese and two US, one a major OEM, the others semiconductor manufacturers.
51. Turok, I. (1993) ‘Inward investment and local linkages: how deeply embedded is ‘Silicon Glen’’, in Regional Studies, Vol. 27, pp.401–417.
52. See Cooper, R. (1995) When Lean Enterprises Collide, Harvard Business School Press, Boston; and Harrison, B. (1994) Lean and Mean The Changing Landscape of Corporate Power in the Age of Flexibility, Basic Books, New York.
53. This research conclusion confirms that of Oakey, R. ‘High-technology industries and agglomeration economies’, in Hall, P. and Markusen, A. (Eds.) (1985) Silicon Landscapes, Allen and Unwin, London, Ch. 7.
54. Collinson [55] confirms that links and exchanges between incumbent electronic electronics multinational corporations (MNCs) and multimedia SMEs in Scotland are limited. He notes, however, that personnel from MNCs do participate in informal networks, as do technical personnel from the large IT support departments of MNCs, including non-electronics MNCs (particularly from banks, finance and insurance firms, which have strong IT departments). At the formal level, however, there are relatively few coincidences of interest between hi-tech SMEs and MNCs and one potential conflict of interest stems from the overall shortage of software expertise, currently affecting Scotland and most other industrial regions.
55. Collinson, S. (1997) ‘Innovation networks in the Scottish multimedia industry’, TechMaPP Working Paper Series, TechMaPP, Dept. of Business Studies, The University of Edinburgh.
56. The Scottish Electronics Forum (SEF) is an advocacy network for the industry, sponsored by Scottish Enterprise. Few indigenous companies are active participants.
57. Scotland has 13 universities employing 6400 science and technology staff and 9400 in all subjects. Also, more recently, the EastMAN network has interconnected most universities with a high capacity fibre optics infrastructure.
58. This picture in electronics is only part of a more general weakness as shown by the findings of a general survey of a random sample of 500 companies located in Scotland. The companies had over three employees in manufacturing, finance and business services. The survey found that academic-industry links are extensive with 82% having some contact with academia. Most (56%) reported informal contacts, 35% used university equipment, 22% used an academic consultant, 9% sponsored research and 5% hold a licence from a university. Companies reported more than one type of linkage with universities. From these figures, it is clear that only a small minority of companies use academia for technology development or process innovation. The most frequent reasons for contacting academia were: enhancement of workforce (24.1%) and management skills (16%), whereas new product development was quoted by just 8% and process innovation by 4%. (Botham, R., ‘Regional development and commercializing the science base. a strategic agenda’, Paper for the Regional Frontiers Conference, Frankfurt Oder, 20–23 September, 1997, pp.7–8).
59. It has been suggested that knowledge networking clustering in Britain around the south-east of England, has taken half a century and huge public subsidy into defence contracting to create, see Hall, P. Breheny, McQuaid, R. and Hart, D. (1987) Western Sunrise, Allen & Unwin, London.
60. Danson, M.W. (Ed.) (1996) Small Firm Formation and Regional Economic Development, Routledge, London.
61. Many of the points here come from personal communication with Ron Botham from Scottish Enterprise.
62. Quote provided by Ron Botham from Scottish Enterprise. Personal communication.
63. Botham, R. (1997) ‘Inward investment and regional development Scotland and the electronics industries’, Paper for the Regional Science Association (British and Irish Section) Annual Conference, Falmouth, 10–12 September.