Co-Operative Ties and the Impact of External Factors Upon Innovation In
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Co-operative ties and the impact of external factors upon innovation in an industrial district: some insights from the North Staffordshire Table and Giftware sector Philip Robert Tomlinson, Ian Jackson To cite this version: Philip Robert Tomlinson, Ian Jackson. Co-operative ties and the impact of external factors upon innovation in an industrial district: some insights from the North Staffordshire Table and Giftware sector. Regional Studies, Taylor & Francis (Routledge), 2011, pp.1. 10.1080/00343404.2011.585148. hal-00724179 HAL Id: hal-00724179 https://hal.archives-ouvertes.fr/hal-00724179 Submitted on 19 Aug 2012 HAL is a multi-disciplinary open access L’archive ouverte pluridisciplinaire HAL, est archive for the deposit and dissemination of sci- destinée au dépôt et à la diffusion de documents entific research documents, whether they are pub- scientifiques de niveau recherche, publiés ou non, lished or not. 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Regional Studies For Peer Review Only Co-operative ties and the impact of external factors upon innovation in an industrial district: some insights from the North Staffordshire Table and Giftware sector Journal: Regional Studies Manuscript ID: CRES-2010-0036.R1 Manuscript Type: Main Section L67 - Other Consumer Nondurables: Clothing, Textiles, Shoes, and Leather < L6 - Industry Studies: Manufacturing < L - Industrial Organization, O18 - Regional, Urban, and Rural Analyses < O1 - JEL codes: Economic Development < O - Economic Development, Technological Change, and Growth, R58 - Regional Development Policy < R5 - Regional Government Analysis < R - Urban, Rural, and Regional Economics Innovation, Co-operation, Industrial Districts, Institutions, Table Keywords: and Giftware http://mc.manuscriptcentral.com/cres Email: [email protected] Page 1 of 48 Regional Studies 1 2 3 4 Co-operative ties and the impact of external factors upon innovation in an 5 industrial district: some insights from the North Staffordshire Table and 6 7 Giftware sector 8 9 10 11 12 Philip R. Tomlinson 13 School of Management, University of Bath (UK) 14 15 Ian Jackson 16 Business School,For Staffordshire Peer University Review (UK) Only 17 18 19 20 Address for Correspondence: 21 22 School of Management 23 University of Bath 24 25 Bath, BA2 7AY 26 Tel: +44 (0) 1225 383798 27 Fax: +44 (0) 1225 386473 28 Email: [email protected] 29 30 31 32 33 (Received January 2010: in revised form April 2011) 34 35 36 37 Abstract 38 39 Drawing upon a sample of 118 firms, this paper explores the impact of co-operative ties and 40 41 the role of institutions upon innovation in the UK ceramic table and giftware sector. We find 42 that locational economies are important for aiding innovation, with firms in the North 43 Staffordshire industrial district holding an inherent advantage vis-à-vis non district firms. 44 45 However while close vertical ties enhance innovation, recent concerns have arisen that 46 horizontal collaboration between district and Asian firms is having a detrimental impact upon 47 innovative capacity within the district. Finally institutions also appear to play an important 48 49 role in facilitating the innovation process. 50 51 Keywords: Innovation, Co-operation, Industrial districts, Institutions, Table and giftware. 52 53 JEL Codes: L67, O18 and R58 54 55 56 57 1. Introduction 58 59 Amid concerns of globalisation and the threats posed by low cost competition, there is 60 currently widespread acceptance in both academic and regional policy circles that the http://mc.manuscriptcentral.com/cres Email: [email protected] Regional Studies Page 2 of 48 1 2 3 survival and future prosperity of Europe’s old and traditional industrial districts is best 4 5 6 attained through seeking a high road to development, one primarily based upon continuous 7 8 innovation and higher value added activities (see Pyke and Sengenberger, 1992, Kaplinsky 9 10 11 and Readman, 2001). Aligned to this view is that the innovation process itself is no longer 12 13 confined within the sole domain of the firm, but rather is enhanced through greater 14 15 associative and co-operative ties between firms as well as with institutions which aid 16 For Peer Review Only 17 18 information and knowledge transfers (Lundvall, 1992, 1995 19 20 1. Within this context, a specific research question arises as to whether such collaborative ties 21 22 are likely to be particularly germane for innovative performance where firms are 23 24 25 geographically proximate in the same or related industries, such as in industrial districts or 26 27 regional clusters (see Bailey and De Propris, 2009a and 2009b). This, of course, has given 28 29 rise to an extensive literature on the concept of ‘learning regions’ and ‘regional innovation 30 31 32 systems’ (see for instance, Cooke and Morgan, 1994, 1998; Morgan, 1997, 2004). 33 34 35 36 37 A particular case is the UK ceramics industry and the North Staffordshire table and giftware 38 39 industrial district, which has borne the brunt of increasing global competition over the last 40 41 decade (see Sacchetti and Tomlinson, 2009). In line with the academic literature on clusters, 42 43 44 regional policy directives primarily from the West Midlands Regional Development Agency 45 46 have focused upon creativity and raising innovative performance, advocating in particular 47 48 that North Staffordshire’s district firms be more open to forming co-operative ties both within 49 50 51 and outside the district and also to other external sources of innovation such as institutions 52 53 (see North Staffordshire Taskforce of the West Midlands RDA, 2003). A recently 54 55 commissioned report by the consulting firm, SQW Consulting (2009) has also echoed similar 56 57 58 sentiments. 59 60 http://mc.manuscriptcentral.com/cres Email: [email protected] Page 3 of 48 Regional Studies 1 2 3 In the UK, studies of innovation in traditional industries such as ceramics are relatively rare, 4 5 6 despite evidence that the sector has been highly innovative not only historically, but also in 7 8 recent decades (Warren et al., 2000) 2. For its continued survival in the UK and particularly 9 10 11 the long term viability of the North Staffordshire district, both creative designs and products 12 13 and smart processes within the industry are considered to be crucial. Thus identifying and 14 15 gauging the impact of some of the (external) factors affecting innovative performance within 16 For Peer Review Only 17 18 the sector is of prime (regional) policy importance, while also contributing to the wider 19 20 literature on regional innovation and development. In this paper, we therefore primarily 21 22 explore the impact of co-operative ties upon innovation in the UK table and giftware sector; 23 24 25 in doing so we also assess the impact of other external factors such as institutions and the 26 27 district effect. 28 29 30 31 32 In conducting our research, this paper employs a mixed methodological approach. First, we 33 34 use survey data from 118 firms within the sector and employ multivariate analysis to assess 35 36 37 the magnitude of co-operative ties, the role of institutions and the district effect upon firms’ 38 39 innovative performance. The sample is split between district and non-district firms. This not 40 41 only mirrors the population of table and giftware firms in the UK as a whole, but it allows us 42 43 44 to capture district specific effects and ascertain as to whether or not the impact of co- 45 46 operation over innovation is unique to the North Staffordshire district. Secondly, we draw 47 48 upon insights from a series of interviews conducted with Managing Directors of UK table and 49 50 51 52 53 54 55 giftware firms plus related suppliers from within the district that explored co-operative ties 56 57 58 and innovation. These insights are used to supplement our quantitative analysis. 59 60 http://mc.manuscriptcentral.com/cres Email: [email protected] Regional Studies Page 4 of 48 1 2 3 The remainder of this paper is set out as follows. Section (2) provides a review of the 4 5 6 literature in relation to co-operative ties and regional innovation systems. Section (3) 7 8 provides some background information and context on the UK table and giftware industry 9 10 11 and in particular the North Staffordshire district. Section (4) outlines the research 12 13 methodology and details of the sample. In Section (5), we outline the model specification and 14 15 provide details of variable construction and descriptive statistics. Section (6) discusses the 16 For Peer Review Only 17 18 quantitative results, in light of observations from the interviews, while finally Section (7) 19 20 concludes. 21 22 23 24 25 2. Co-operative Networks, Districts and Innovatio n 26 27 2.1 Context 28 29 Whether through vertical ties or (in some cases) horizontal links, it is now generally accepted 30 31 32 that firms can improve their innovative performance through inter-firm exchange and co- 33 34 ordination of resources and associated synergies in both production and organisation. Early 35 36 37 research by Von Hippel (1976, 1988), for instance, demonstrated how end users played a 38 39 crucial role in product innovation in industry, while Hakansson (1987) considered innovation 40 41 and technical advance to be a product of network ties, particularly those involving both 42 43 44 buyers and suppliers where competences are generally quite complementary. Indeed, close 45 46 collaboration in supply chains often facilitates knowledge transfer between users and 47 48 suppliers and the adoption and adaptation of new standards within the industry, while 49 50 51 feedback loops allow for the refinement of products and/or processes (Tether, 2002) 52 53 3.