Too much of a good thing? The dark side of collaboration in regional innovation networks

Too much of a good thing? The dark side of collaboration in regional innovation networks

In the last decade, the Hauts-de-France region has made sizable efforts to promote collaboration between local entrepreneurs, private firms, and universities. For example, PSA and Total decided to invest in a new factory to produce batteries for electric vehicles in Douvrin, collaborate with members of the Hauts-de-France automotive cluster, and benefit from local innovation parks and centers (e.g., Critt M2A, Valutec). Local players have also been encouraged to engage in initiatives outside the region, in sectors like retail, nutrition, bio-agriculture, and seafood, benefiting from regional, French and European partnerships. Notwithstanding all these efforts, the region keeps lagging in French productivity rankings. It accounts only for 3.7% of the patent filings in France. Its rate of new venture formation per 10 000 inhabitants is half compared to the region of Provence-Alpes-Côte d'Azur, and about one-third of the one observed in Île-de-France.

Under what circumstances do increased collaborative efforts, like in the Hauts-de-France case, not lead to increased innovation and entrepreneurship? Elisa Operti, Associate Professor at ESSEC Business School, and Amit Kumar, Assistant Professor at Warwick Business School, addressed this puzzle in a recent study in Regional Studies. The study is part of a broader research project funded by the CY Initiative of Excellence and l’Agence Nationale de la Recherche.

The first step to address this paradox was to bring together past research on collaboration networks and regional innovation. The innovation-enhancing effects of either creating connections between previously disconnected actors within a region (internal brokerage) or linking local players to actors in other areas (external boundary-spanning) are well-known. Yet both mechanisms have been studied independently. By contrast, the research team examined what happens when they operate simultaneously, developing a typology of regional collaboration networks based on the degree of internal brokerage and on the number of collaboration ties outside the region. They identified four archetypes. The first configuration ("fortress") characterizes internally cohesive regions, with all innovators working for a few large firms or universities, but with limited connections outside the region. The second type of configuration ("playing field") depicts regions that are still pretty disconnected from the national scene, but are internally diverse, with a few key brokers connecting a vibrant ecosystem of start-ups, firms and public players. The third type of configuration ("absorber") describes internally homogeneous and cohesive regions, where actors have developed several collaboration ties outside the region and rely mainly on external knowledge to develop new ventures and innovations. The last type of configuration ("multilevel brokerage") is where boundary-spanning collaboration between diverse actors occur both within.

To understand which of these configurations is better for innovation, the researchers collected data on the structure of the collaboration networks between inventors within and between United States municipal areas (MSAs) between 2000 and 2015. They studied how these structures affect regional innovation output. The results indicate that while both types of collaboration ties are beneficial, it is hard for innovators in a region to handle both types of collaboration simultaneously. Thus, "playing field" or "absorber" configurations are often more conducive to innovation than "fortress" or "multilevel brokerage".

Two reasons explain this counter-intuitive result. On the one hand, the effect may be due to the cognitive and information overload generated by multilevel brokerage. In times where attention and resources are scarce, innovators may struggle when bringing together diverse local actors while at the same time managing the demands of distant research collaborators. On the other hand, innovators who build local bridges while also engaging in external initiatives may be exposed to conflicting demands and organizational cultures. As a result, their loyalty to local or national goals may be questioned. Their motivation is going to be challenged, and such tensions are going to limit their implementation capacity.

Implications for policy

The research provides clear guidelines on how policymakers should design policies that leverage collaboration networks to encourage innovation and entrepreneurship:

1. One size doesn't fit all. Policymakers think that innovation policies derived from well-known success cases can bring homogeneous benefits when applied to other regions. For example, regulators across the globe have tried to replicate the "Silicon Valley" model by incentivizing the creation of ties between local innovators and national or international players. However, this approach can work only if the region has already developed a cohesive internal support network. If this is not the case, local regulators should focus on unifying the internal/local community: if regional innovators and entrepreneurs are not ready, distant collaborations and internationalization can even be harmful.

2.   More isn't always better. Regulators should be more aware of the knowledge overload and hidden costs associated with offering too many research collaborative incentives at the same time. Rather than developing numerous grant programs that stimulate local and global connections simultaneously, policymakers should concentrate resources on a few selected incentive programs around well-defined topics of local and national importance. They should also provide support to help entrepreneurs and corporate innovators pick which collaborative configuration works best.

3.  Make long-term plans. Even if it may be difficult to engage in local and distant collaborations simultaneously, both types of networks can be exploited in a longer time frame. For instance, policymakers can first foster internal brokerage by bringing together previously disconnected universities and business players in a territory. This is, for example, what France has done with the "Programme d'Investissement d'Avenir" that incentivized the creation of territorial alliances between co-located universities and research centers. Only when these local networks are in place and governance issues have been addressed should policymakers encourage nationwide and international connections.

Tips for innovators and entrepreneurs

Innovators and entrepreneurs can also derive valuable insights on how to maximize the gains from collaboration from this research:

1. Map the innovation landscape around you. The environment can shape the type of innovations you create and their success chances. The first step to benefit from the environment is understanding what kind of network opportunities exist around you. Are you located in a region where all actors know one another and collaborate closely? Or does your area depend strongly on other regions and foreign players? Depending on the diagnosis, you may need to engage in different types of collaboration.

2. Create value by fostering new connections. Depending on the analysis you performed in the first step, entrepreneurs and innovators must think about how they can create value by establishing new connections. If the regional network surrounding them is homogeneous and cohesive, they should think about making external connections. If local innovation actors are not working together yet, they should focus first on the value you can create by bringing these actors together.

3. Don't overdo it. Entrepreneurs and innovators should be more aware that collaboration brings advantages, but also conflicting demands and cognitive and work overload. Thus, they should learn to be highly selective in the choice of collaboration opportunities. They should also learn to handle the pressure and overload emerging from conflicting demands from multiple collaborators.

Reference

Operti, E. & Kumar, A. (2021). Too much of a good thing? Network brokerage within and between regions and innovation performance. Regional Studies, doi: 10.1080/00343404.2021.1998417

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