Organizing Product Innovation: Hierarchy, Market or Triple-Helix Networks?

Abstract

This paper assesses the extent to which the organization of the innovation effort in firms – as well as the geographical scale at which this effort is pursued – affects the capacity to benefit from product innovations. Three alternative modes of organization are studied – hierarchy, market and triple-helix-type networks. Furthermore, we consider triple-helix networks at three geographical scales – local, national and international. These relationships are tested on a random sample of 763 firms located in five urban regions of Norway which reported having introduced new products or services during the preceding three years. The analysis shows that firms exploiting internal hierarchy or triple-helix networks with a wide range of partners managed to derive a significantly higher share of their income from new products, compared to those that mainly relied on outsourcing within the market. In addition, the analysis shows that the geographical scale of cooperation in networks, as well as the type of partner used, matters for the capacity of firms to benefit from product innovation. In particular, firms that collaborate in international triple-helix-type networks involving suppliers, customers and R&D institutions extract a higher share of their income from product innovations, regardless of whether they organize the processes internally or through the network.