Apr 242011

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How can we make businesses more innovative?

That’s easy isn’t it? We just group them together into clusters (preferably in science park developments) and it will happen… won’t it? The trouble with this cluster theory of innovation is that it confuses cause and effect. When we see a successful cluster like Silicon Valley it’s tempting to assume that the clustering made these firms successful. Jumping to the conclusion that clustering is a cause of innovation success has triggered a lot of government expenditure to create these ‘hot spots’, but what if clustering is an outcome of successfully innovating firms? Are clusters really an innovation ‘red herring’?

The trouble is that the evidence for cluster theory is really shaky. In a previous post I mentioned the cargo cult analogy for initiatives like clusters and the weight of evidence against clusters as a precursor to innovation. A recent study of 1,600 Norwegian firms concluded that:

“The results indicate that firm innovation in urban Norway is mainly driven by global pipelines, rather than local interaction. The most innovative – both in terms of basic product innovation and radical product and process innovation – firms are those with a greater diversity of international partners. Local and even national interaction seems to be irrelevant for innovation.”

The full paper is definitely worth reading. It is robust research and if you don’t enjoy the stats then skip to the conclusions.

Read more . . .


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