Do Networks Matter for Innovation? The usefulness of the economic network approach in analysing innovation

Abstract

Economic network theory emphasises the importance of external resource mobilisation. In this paper, the relations between the mobilisation and use of internal and external resources in innovation processes, and the innovative performance of firms, are explored empirically, using an adapted version of Håkansson's (1987) economic network model. The main research question was: to what extent do network variables contribute to the innovative performance of firms? To answer this question, we assessed the explanatory power of economic network theory within the empirical study of innovation. Firms were found to engage in various configurations of internal and external resource bases, enabling them to innovate with better results. The relations in the estimated models are strongly influenced by moderating variables such as sector, and type and level of innovations produced. Our main conclusion is that models that include both internal and external resources explain the innovative performance better than models in which only internal resources are used.