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The spatial organization of innovation strategies in the Eindhoven region A study on the socio-spatial implications of innovative networks in the high-tech sector of the Eindhoven region Stefan Behlen May 2014 1 The spatial organization of innovation strategies in the Eindhoven region A study on the socio-spatial implications of innovative networks in the high-tech sector of the Eindhoven region Master thesis Economic Geography in combination with a graduate internship at the SRE Radboud University Nijmegen Faculty of Management Sciences Master Economic Geography Author: Stefan Behlen 0823937 Date: May 2014 Courtesy of: Supervising lecturer: prof. dr. Frans Boekema Internship supervisor: drs. Thomas Voncken 2 Preface With completion of the research project presented in this master thesis the master program "Economic Geography" at the Radboud University is coming to an end. Meanwhile, it is some time since I started writing this thesis. During the writing of this thesis, I have followed an internship at the SRE (Samenwerkingsverband Regio Eindhoven) for eight months. The role of public entities on cluster development had caught my interest, so I was very pleased that I was received by the SRE with open arms, where I was immersed among several tasks of the Economic Affairs department. This experience helped me to develop this interest into a subject for the thesis. Partly due to the freedom and in addition the guidance I was given at the SRE, I could focus on doing my research. Because of this internship, I was able to worK with a bulK of information on the spatial organization of innovation networks in the region Eindhoven. Concerning this thesis I owe a lot to my supervisor Thomas Voncken. He helped me with the collection of data, and directed me by focusing on the study. The many conversations inspired me to keep faith in myself. He advised me to pick up experiences as much as possible during my internship that are important for me, so I could develop my professionalism and personality. I would also like to thank prof. dr. Frans BoeKema, my thesis supervisor at the Radboud University. He appeared to be an inspiring mentor to me. Again and again, he made sure that I could bring this thesis a step further towards a final product. His comments and constructive attitude towards the subject in combination with emphasizing on my own responsibilities as a "researcher", I experienced as very pleasant. Because of the long duration of the research and writing of this thesis it was sometimes difficult to stay motivated. Thanks to his sharp and constructive feedback he made sure that I could resume this study with vim and vigour every time. Finally, I would like to thank the other colleagues of the SRE for the pleasant cooperation and the respondents for their contribution to the research. Without them, this outcome would not have been possible. Stefan Behlen May 2014 3 Summary According to many recent conceptual developments in the innovation and economic geography literature, networks can be seen as qualitative relationships which are reflected in inter- organizational knowledge relationships. It has been widely argued that these personal networks across organizations are critical for innovation processes, in particular in high-technology sectors where the external sourcing of knowledge through networks has been identified as an important mechanism. These insights suggest that learning within a cluster is a process of social interaction among individuals rather than a rationally organized process within and between firms and that, consequently, learning should be understood from the social context in which it takes place. However, the role of institutions on local scale to innovation and learning remain underexplored. So if the public sector like the SRE wants to stimulate innovation and cluster development through incentive funds and by operating as an accelerator and connector in the collaboration with stakeholders, they must be aware of the current and future spatial strategies of Key actors within a cluster as well as the way these strategies are constituted. Therefore they need to be provided with information about the role of space, as well as the role of knowledge (including their spatial implications) that constitute the structure of innovation strategies of key actors involved in innovative activities in the high-tech sector. In the literature, there is a variety of conceptions to be found on spatial theories on innovation. Among others, ideas of the theoretical perspectives ‘regional innovation systems’ and ‘learning regions’ have gained increasing influence in regional studies and policies during the last one and a half decade. There are currently two trends of development of the original theories to be discovered. One trend is the diversification of the notion of proximity made by Boschma (2005). He shows that not only the spatial concentration, but also other social variables play a role in reinforcing a cluster. There can be four other forms of proximity be distinguished besides spatial proximity: cognitive proximity, social proximity, organizational proximity and institutional proximity. Another trend is the assumption made by Asheim et al. (2005a), whom state that policy implications can be derived from spatial innovation strategies, stemming from socio-spatial implications of knowledge. He discusses how different industries rely on different knowledge bases (analytical, synthetic and symbolic) for activities that are most central to their competitiveness. These two approaches form the theoretical basis of the spatial organization of innovation strategies, which can be a: stand alone, local buzz or global pipelines strategy. Therefore, the novel contribution of this study is to take a perspective on the spatial organization of innovation strategies of Key actors within the HTSM sector, in order to provide the public sector (SRE) 4 policy recommendations concerning enhancement of innovation and cluster development in the region. This is done on the basis of a qualitative case study, where the data on the main characteristics of the spatial context in which knowledge transfers and networks in the BRE arise will be obtained on the basis of documents and other studies and the data on the spatial organization of innovation strategies of Key actors within the HTSM sector will be obtained by depth-interviews, resulting in an improved insight that lead to policy recommendations concerning enhancement of innovation and cluster development in the region. The analysis shows that behind the economic success of the Brainport region lies a centuries -old history of entrepreneurship, a decades-long tradition of regional cooperation and ten years of organizational experience in collective strengthening of open innovation processes. Particularly the economic structure of OEMs and suppliers, many spin-offs and knowledge institutions are considered by the respondents as most important location advantages for innovative technological firms. Concerning the five forms of proximity, I can conclude that some factors are more critical than others in the networks. The nature of the type of knowledge that is particularly developed in this region - in this case it concerns high-tech knowledge which means production is characterized by low volume and high precision – is concerned with a process of prototyping and testing which involves much uncertainty. It seems that this process particularly benefits from a high degree of physical and social proximity, and to a lesser extent cognitive, organizational and institutional proximity. As for innovation strategies many firms use the knowledge they received from both the external resources (local and global) in their innovation process. Next to the contacts within the cluster, non regional relations seem to be very important to create new knowledge. The combination of contacts on both scales can strengthen the competitive position of the region. In that sense it is more accurate to speak of a place-based development in (international) economic networks than of a ‘learning region’. This is in line with the philosophy behind Smart Specialization, where the focus is placed on the strategic potential of a regional area to stimulate collaboration - between regions, sectors and levels in order to increase efficiency in research and innovation. Conventional wisdom is that R&D has been globalized, so innovation strategies are increasingly focused on global pipelines. However, this study challenges such understanding and provides a more nuanced conclusion. Multinationals, and other institutions deriving on analytical based knowledge make use of global pipelines but have their R&D centers in the BRE due to path-dependency of the region. They play a peripheral role due to the advantages of local buzz. The implications from these findings are substantial. While global pipeline strategies seems rampant, you cannot outsource or geographically separate certain processes of creating innovations. Global pipeline strategies may take place, but only if a component or functionality is specifically defined and separated. The 5 innovation process, including the engineers and managers who create innovations, have to be in proximity, and the role of local buzz has not diminished. The history of the Eindhoven region shows that targeted policy pays off. A concrete proposal is accelerating processes in which political decision of the SRE is involved, because their role is to monitor the economic interest of the region and

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