Innovation Systems, Networks and Social Capital: Discuss the different roles of weak and strong ties in innovation processes
Innovation processes often mainly consist of the creation of genuine new knowledge or the recombination of existing knowledge in a new context. These processes are managed by people, who are also the carrier and translator of knowledge. As knowledge creation is only partially accomplished by one person on its own, and nearly all economic activities is embedded in social systems, the inter-communication between individuals within a firm or across firm boundaries must be acknowledged as equal important in the process of innovation. Network theories must be seen at the blurred boundaries between sociology, trying to understand which social layers are (positively) affected by having a broad and diverse or closed and narrow social nexus, and management theory, trying to understand the organizational implications of the nexus of the firms’ stakeholders. Therefore this essay will elaborate on the role of ties, in its different shapes from weak to strong, within the innovation process. It will particularly focus on when which shape of tie is particularly important for which kind of successful innovation (incremental versus radical). It will also show how the focus on knowledge developed in management theory and how certain theories implicitly use the notion of networks to explain innovation processes.
Today, when more and more bodies are talking about an evolving knowledge society, “knowledge” and “intangible values” are buzz words and maybe seen as the most important assets for the ability to be innovative, innovation being a necessary condition for an organization to be able to uphold its position within a liberal market. Schumpeter, for example, sees knowledge as a central variable in the process of creative destruction and implementation of new combinations of product factors. Looking back in the history of research shows that scholars started early to award knowledge and the exchange of knowledge as an important source, using different perspective of understanding, all trying to emphasise the importance of intangible values for innovation, in a macroeconomic and microeconomic context, even without explicitly stating the effects of knowledge creation and sharing in a network framework.
Penrose (1959) elaborated the Resource-based view focusing on the internal assets of a company as a starting point for elaboration competitiveness in difference to the Industry-based view by Porter (1980) where the focus on keeping competitive is dealing with the external factors like suppliers, buyers, potential entrants and substitutes. Becker contributed (1993) with the human capital theory in the sense of that if a company has motivated and qualified employees this will have direct positive influence on the production process. Also important to mention are the theories of the knowledge-based view and the intellectual capital view (which both can be seen as a further development of the resource-based view) (Stam, 2006) (Martín-de-castro, et al., 2011). Especially the intellectual capital view, branching up in human capital, structural capital and relational capital (sometimes also referred to as social capital) emphasizes the relevance of networks and the social relationships within, as is acknowledges the power of relational capital. In that sense it challenges the idea of solely looking for the knowledge worker as the solution to a knowledge problem (know-how) but also taking into account the important effect of know-who by utilizing (social) networks. Nevertheless the acquisition of companies to get access to the embedded human capital is a booming trend. (Coyle & Polsky, 2013)