The concept of innovation networks has become popular in recent years, as it appears to offer many of the benefits of internal development, but with few of the drawbacks of collaboration. Networks have been claimed by some to be a new hybrid form of organization that has the potential to replace both firms and markets, in essence the virtual corporation whereas others believe them to be simply a transitory form of organization, positioned somewhere between the internal of the organisations and external market conditions. Whatever the case, there is little agreement on what consumers of a network, and the term and alternatives such as ‘web’ and ‘cluster’ have been criticized for being too vague and all-inclusive.
Little is known about innovation networks, there is no clear definition of what an innovation network is. Rather there are numerous models, each emphasizing different aspects depending on the research questions. It is also not clear whether there are common characteristics applicable to all spheres of innovation, with little commonality. Not very much can be found in the literature about the dynamics of innovation networks, how they arise, the growth processes they undergo and the way they merge into other networks.
Different experts adopt different meanings, levels of analysis and attribute networks with different characteristics. For example, academics on the Continent have focused on social, geographical and institutional aspects of networks, and the opportunities and constraints these present for innovation. In contrast, Anglo-Saxon studies have tended to take a systems perspective, and have attempted to identify how best to design, manage and exploit networks for innovations.
Whilst there is little consensus in aims or means, there appears to be some agreement that a network is more than an aggregation of bilateral relationships and therefore the configuration, nature and content of a network imposes additional constraints and presents additional opportunities A network can be thought of as consisting of a number of positions or nodes, occupied by individuals, firms, business units, universities , governments, customers or other factors, and links or interactions between these nodes. A network perspective is concerned with flow these economic factors are influenced by the social context in which they are embedded and how actions can be influenced by the position of actors. For example, national systems of innovation, discussed are an example of an innovations network at a high level of aggregation. Innovations networks can exist at any level: global, national, regional, sector, organizational or individual. Whatever the level of analysts the most interesting attribute of an innovation network is the degree and type of interaction between actors, which results in a dynamic but inherently unstable set of relationships. Innovation networks are an organizational response to the complexity or uncertainty of technology and markets and as such innovations are not the result of any linear process. This makes it very difficult, if not impossible, to predict the path or nature of innovation resulting from network interaction. The generation of application and regulation of an innovation within a network is unlike the trial and error process within a single firm or venture or variation and selection within a market. Instead, actors in an innovation network attempt to reduce the uncertainty associated with complexity through a process of recursive learning and testing.
A network can influence the actions of its members in two ways. First through the flow and sharing of information within the network, second, through differences in the position of actors in the network, which causes power and control imbalances. Therefore the position an organization occupies in a network is a matter of great strategic importance, and reflects its power and influence in that network. Sources of power include technology, expertise, trust, economic strength and legitimacy. Networks can be tight or lose, depending on the quantity (number), quality (intensity) and type (closeness to core activities) of the interactions or links. Such links are more than individual transactions and require significant investment in resources overtime.
Product interactions – products and groups of products and services interact, are adapted.
Process interactions: the interdependence between the product and process and between different processes and production facilities are another interaction within a network, together with their use and utilization.
Social interaction within the organization – for example, business units are more than a combination of product and process facilities. They consist also of social interactions with knowledge of and an ability to work with, other business units within the organization.
Social interaction between organizations – business relationships both restrict and provide opportunities for innovation, particularly for systemic innovations.