Networks and network resources in technological innovation systems: Towards a conceptual framework for system building

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Abstract

Previous research has shown that formal networks can play a crucial role in the formation of technological innovation systems (TIS). Firms and other actors collaborate in formal networks not only to generate new knowledge but also to strategically create and shape supportive system resources such as technology specific R&D programs. This paper takes a closer look at the resources, which are developed and deployed by networks to facilitate the building up of a TIS. Networks rely not only on the organizational resources of their members but also on new resources developed at the network level including network governance structures, trust among network members, a common understanding of the strategic goals or a good reputation of the network. Our analysis shows that the capacity of networks to fulfill different tasks of system building especially depends on the network resources they are able to establish. With the differentiation of organizational, network and system resources we introduce a conceptual framework, which makes three important contributions. It highlights the strategic nature of (innovation) system building; it allows us comparing the contribution of different actors and formal networks in this regard; and it improves our understanding of how firm and system level processes are intertwined.

Highlights

► We identify different types of resources which formal networks have at their disposal. ► Networks use organizational and networks resources. ► On the basis of these resource types two kinds of networks are differentiated and compared. ► We improve the concept of resources used in TIS and develop a resource-oriented perspective of TIS analysis.

Introduction

New technologies often have a hard time to develop and diffuse, especially if they are fundamentally different from established technological structures in a field. In early stages of development, performance of a new technology might be low, market prospects unclear and contexts of use still ill-defined. At the same time, competing established technologies are well supported and stabilized by the wider socio-technical regimes with which they have evolved [1]. In the case of environmental innovations that generate positive externalities, e.g. as they generate less emissions than established technologies, the challenges are even more pronounced [2]. For the development and diffusion of such ‘clean’ technologies and a potential transition towards more sustainable modes of production and consumption, supportive structures which legitimize and stabilize the emerging technology have to be developed — be it in regulatory terms cf. [3], [4] or in the broader sense of an infrastructure for innovation [5].

A crucial point is that technology-specific support structures can neither be taken for granted nor treated as being external to the process of technology development [6]. Instead, they are created and shaped by firms and other actors with a stake in the novel technology (e.g. [7], [8]). Innovating actors, in other words, often commit themselves to system building as they set up or adapt broader institutional structures that support the emerging business field [[9], [10], [11], [12]].

The process of system building and the development of new technological fields can be studied with the help of the literature on technological innovation systems [13], [14]. The innovation systems approach highlights the role of institutional structures and the importance of actors for the emergence of technological innovations. A key interest is to identify system failures in the emergence of new technologies and to derive recommendations for technology-specific policies [15], [16].

For single actors, system building is often very difficult to achieve, which is why they cooperate with others in this respect [17]. Informal networks or personal linkages [18] are as important here as formal networks of innovating firms. While in the innovation literature, inter-organizational networks have received quite some attention as they facilitate interactive learning and knowledge generation [19] the role of networks in supporting collective action and system building has been less in focus [20]. We believe that a systematic analysis of formal networks, i.e. visible organizational structures where firms and other actors come together to achieve common aims, is important to better understand processes of innovation system building.

In Musiolik and Markard [11] it was shown that formal networks played a crucial role in the emerging technological field of stationary fuel cells as they developed technical standards, specific R&D programs or educational programs, for example. These structures, which were set up as a result of a broad range of activities at the level of different networks, were conceptualized as system resources, which positively contributed to some key innovation system functions (ibid). Some of these networks have been able to exert influence widely, whereas others have only had an effect on one or two system resources. In this paper we follow up on the latter by asking why networks differ in their abilities to influence system resources and which kinds of formal networks might be important for the build-up process of an emerging TIS? In particular, we want to look into processes at the network level to understand how they develop and combine different kinds of resources, which are key for the emerging competences of networks and their ability to create and shape supportive structures at the innovation system level.

To this end we combine concepts from the literature on strategic management [[21], [22], [23]] with the innovation systems literature. The literature on the resource based view (RBV) offers valuable insights into a resource-oriented perspective on innovation system building [24], [25]. Following the ideas of the RBV, resources at the organizational level are developed and deployed for strategy making, and set limits to what a firm can do [[26], [27], [28]]. Strategically relevant resources, however, may not only just be located at the firm level but also beyond, i.e., in inter-firm networks [22], [29], [30] or even at the level of innovation systems or industries [11], [31]. For emerging technologies this broader resource space [31] is important as system building can be regarded as a resource driven process. In an environment characterized by a high level of uncertainty and ambiguity [32], key actors may start from the resources they have available and continuously extend these resources while interacting with other organizations [33]. This strategy – forging networks of actors and setting up a cycle that increases the resources available – reduces ambiguity, uncertainty as the technological field is co-created [23].

In our empirical study we focus on a selection of five major formal in the emergent field of stationary fuel cells in Germany. Prior analyses have identified this field as highly dynamic [[34], [35], [36]] and demonstrated the importance of system building in this case [11]. In addition to that, agents of different technological applications (portable, stationary and mobile fuel cells) are currently competing for public support [11], [37]. Trust, joint knowledge, power and reputation might be resources drawn on at the network level to develop the field. In the study interviews have been carried out to capture in detail the resource endowment of members, the establishment of resources at the network level and finally their deployment towards system build-up.

The remainder of the paper is structured as follows. Section 2 starts with a brief review of the TIS- and the RBV literature and also specifies our analytical framework. In Section 3, we describe some features of the networks selected and the context they are operating in. 4 Resource portfolios and their deployment, 5 Differentiation of resources and networks in system building present the results of the empirical analysis: here we report on the different resources used in the selected innovation networks, using two examples to show how these resources have been deployed to influence system resources. We also take initial steps towards generalizing our results, and delineate different types of resources and the role that the different networks play in TIS development. Section 6 concludes.

Section snippets

Theoretical background

In the following section, we briefly introduce the technological innovation system concept and the resource concept in the RBV literature, and also specify our analytical framework that links resources at different levels in TIS in our quest to analyze the processes of system building.

Key networks and created and shaped system resources

Stationary fuel cells are small-scale devices for single or two-family homes which generate heat and electricity from natural gas and are based on cogeneration, i.e. the combined generation of heat and power (CHP). In Germany several hundred of stationary fuel cells are currently installed in field tests, while the technology still faces many technological and organizational challenges. Fuel cell manufacturers, for example, are currently struggling to meet the performance standards of

Resource portfolios and their deployment

In the following we take a closer look at how the networks were able to create and shape the aforementioned system resources. What were the supportive structures and the resources they drew upon to achieve their goals?

Differentiation of resources and networks in system building

Our results have shown that the five networks used different kinds of resources to achieve their goals. In this section, we compare the characteristics of organizational- and network resources and discuss how they affect the system building capacity of formal networks.

Summary and outlook

In this paper, we have been studying why networks differ in their abilities to influence system resources and which kinds of formal networks might be important for the build-up process of an emerging TIS. Formal networks rely on different bundles of resources, which explain why the networks can take over different tasks in terms of system building. On the one hand, networks use and combine the organizational resources of their members: financial resources, expertise, firm reputation etc. On the

Acknowledgment

The authors would like to thank the Competence Center Environment and Sustainability of the ETH Domain (CCES) for funding. In addition this paper also profited from constructive inputs at the Academy of Management Annual Meeting 2011 in San Antonio. Finally, we would especially like to thank the special issue editors and three anonymous reviewers for helpful comments on earlier drafts and Mike Simpson and Tara Helbling for proofreading.

Jörg Musiolik is a Ph.D. student at the Centre for Innovation Research in Utility Sectors (Cirus) at the Swiss Federal Institute of Aquatic Science and Technology (Eawag). He is an economic geographer by training and conducted a case study in the field of stationary fuel cells in Germany to analyze actor strategies and the deployment of resources in the build-up of this technological innovation system.

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  • Cited by (0)

    Jörg Musiolik is a Ph.D. student at the Centre for Innovation Research in Utility Sectors (Cirus) at the Swiss Federal Institute of Aquatic Science and Technology (Eawag). He is an economic geographer by training and conducted a case study in the field of stationary fuel cells in Germany to analyze actor strategies and the deployment of resources in the build-up of this technological innovation system.

    Jochen Markard works as a group leader and senior researcher at Cirus/Eawag. He holds degrees in electrical engineering and energy economics and received his PhD in 2003 from ETH Zurich. His research interests are innovation and transition processes in infrastructure sectors with a focus on radical and sustainable technologies.

    Marko P. Hekkert is a full professor of ‘Innovation System Dynamics’, much of his research time being devoted to studying the process of sustainable technological change and eco-innovation.

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