499

Networks of innovators: A synthesis

of research issues
C. Freeman
MERIT, University of Limburg, Maastricht, Netherlands and SPRU, University of Sussex, Brighton, UK

This paper will first summarise some key findings of em- the great importance of innovation for productiv-
pirical research in the 1960s on the role of external sources of ity growth and for the competitive performance of
scientific, technical and market information in successful in-
firms, industries and nations, they made very few
novation by business firms. This work demonstrated unam-
biguously the vital importance of external information net- empirical studies of innovative activities or of the
works and of collaboration with users during the development diffusion of innovations. Even those economists,
of new products and processes. Moreover, the dilemmas of such as Schumpeter, who put innovation at the
cooperative research in competitive industries were recognised centre of his entire theory of economic growth and
and studied long ago [35,62,76]. What then is new about the
development, did not study the specific features of
present wave of interest in “ networks of innovators”? Are
there new forms of organisation or new technologies or new actual innovations in any depth. He attributed
policies which justify renewed research efforts since they go innovative success to a general quality of “en-
beyond those developments already analysed in earlier em- trepreneurship” but recognised that with the
pirical and theoretical work? growth of large monopolistic firms the nature of
Section 2 reviews the evidence of new developments in the
this activity had radically changed [60]. Although
1980s in industrial networks, regional networks and govern-
ment-sponsored innovative activities. It shows that there has he identified the growth of professional in-house
indeed been a major upsurge of formal and semi-formal flexi- R&D as a fundamental change in the organisa-
ble “networks” in the 1980s including some new types of tion of large-scale industry he did not examine the
network. It also shows that some older forms of research
interaction between the R&D function and other
cooperation have been modified and transformed. The papers
established functions within the firm, still less
at Montreal largely concentrated on the role of regional sup-
plier networks, which are a good example of such “new wine in with external networks. Moreover, his approach to
old bottles”. This paper attempts to locate the regional net- entrepreneurship as an exceptional heroic act of
work discussion within a wider context of new developments in will disposed him to view the launch of new
networking.
products as a way of imposing the creative ideas
Section 3 discusses the cattses of these new developments
and whether they are likely to remain a characteristic of
of the entrepreneur on passive or unreceptive users.
national and international innovation systems for a long time Thus it remained as a task for his successors to
to come, or prove to be a temporary upsurge to be overtaken put flesh and blood on the bare bones of his
later by a wave of take-overs and vertical integration. concept of entrepreneurship and innovation, and
Finally, section 4 sums up some of the other key issues
to modify it in the light of the new findings of
which require further research and debate, and the implica-
tions for social science theory.
empirical research.
Geographers and sociologists did rather better
than economists in the 1950s especially in diffu-
1. Empirical research on the sources of innovative sion studies, and it was not until the 1960s that a
success more systematic, empirical approach to innovation
studies took off among economists. Until the early
Until the 1960s most studies of innovation 1970s most, if not all, of the work was con-
were anecdotal and biographical or purely techni- centrated on the study of specific individual in-
cal. Although economists had always recognised novations. It aimed to identify those characteris-
tics of each innovation which led to commercial as
well as to technical success, whilst recognising the
Research Policy 20 (1991) 499-514 inherent element of technical and commercial un-
North-Holland certainty.

0048-7333/91/$03.50 0 1991 - Elsevier Science Publishers B.V. All rights reserved

 The most effective way to identify those factors of R&D work thus complemented external net-
which are important for success is by paired com- works.
parisons between those innovations which succeed (5) High status, wide experience and seniority of
and those which fail, as in project SAPPHO, one the “business innovator”. The term “business in-
of the most comprehensive empirical studies of novator” was used to describe the person chiefly
innovations and representative of a whole genera- responsible for the organisation and management
tion of research 1571. This project measured about of the innovative effort-effectively the Schumpe-
a hundred characteristics of 40 pairs of innova- terian “entrepreneur”. Contrary to the expecta-
tions, but only about a dozen or so of the hy- tions of the SAPPHO researchers, this individual
potheses systematically discriminated between was generally older in the case of successful in-
success and failure. The most import~t of these novations than failed ones. This result was inter-
were: preted as indicating that, innovation could not
succeed without the strong commitment of top
(1) User needs and networks. Successful innova- management particularly in large organisations,
tors were characterised by determined attempts to and that the role of network coordination was
develop an understanding of the special needs and very important, both within the firm and outside
circumstances of potential future users of the new it.
process or product. Failures were characterised by (6) Basic research. The performance in-house
neglect or ignorance of these needs. Numerous of basic research was associated with success, par-
studies since SAPPHO have confirmed the vital ticularly in the chemical industry. But this perfor-
importance of these user-producer linkages, nota- mance was important mainly because of the link-
bly the work of Lundvall [38,39] and his col- ages it facilitated with external networks, and
leagues. especially universities.
(2) Coupling of deueiopment, production and
marketing ucrjujtie~~. Successful innovators devel- The original SAPPHO Project concentrated on
oped techniques to integrate these activities at an only two branches of manufacturing industry,
early stage of the development work. Failures chemicals and scientific instruments. But later re-
were characterised by the lack of adequate inter- search in several other countries and industries,
nal communications within the innovating organi- such as machinery and electronics, confirmed the
sation and lack of integration of these functions. main results [38,41,47]. Furthermore, almost all
Again this result has been abundantly confirmed these and other studies confirmed the central im-
by later research, particularly in the case of portance of external collaboration with users and
Japanese techniques for managing innovation external sources of technical expertise.
[2,4,32,65]. These integrating activities may be re- These empirical studies of innovation demon-
garded as “internal networks” within the firms. strated the importance of both formal and infor-
(3) Linkage with external sources of scientific mal networks, even if the expression “network”
and technical information and advice. Successful was little used. Although rarely measured sys-
innovators, although typically having their own tematically, informal networks appeared to be the
in-house R&D, also made considerable use of most important. Multiple sources of information
other sources of technology. Failures were char- and pluralistic patterns of collaboration were the
acterised by the lack of communication with exter- rule rather than the exception. Thus the in-house
nal technology networks, whether national or in- competence of the R&D Department was comple-
ternational. mented by occasional or regular links with univer-
(4) Concentr~tju~ of high qu~fjt~ R&D resources sities, with government laboratories, with con-
on the innovative project. Whereas size of firm did sultants, with Research Associations, and with
not discriminate between success and failure, size other firms. Already in the 1950s Carter and
of R&D project did discriminate. Moreover, the Williams [lO,ll] had shown that these multiple
innovations which failed not only had lower re- links were characteristic of the “progressive” firm.
sources than those which succeeded but also Although informal networks predominated,
suffered from failures in development leading to formal R&D collaboration agreements between
lower quality products. Both quantity and quality firms were certainly not something which sud-
 C. Freeman / A synthesis of research issues 501

denly began in the 1980s. The largest single R&D the RAs were actually used intensively by firms
project before the Mahattan Project was a joint who had their own R&D. The RAs were thus an
R&D effort by five large oil companies and two important ancillary and complementary source of
plant contractors to develop a fluid bed catalytic scientific and technical information rather than a
cracking process for the oil industry in the 1930s substitute for indigenous innovative activity.
[17]. Both this and many other agreements in the Essentially the same point can be made about
oil, chemical and electrical industries, provided for licensing and technical know-how agreements.
patent-sharing, cross-licensing and exchange of These grew very rapidly after World War II and
technical know-how between firms over quite long made a very big contribution to the international
periods. transfer of technology. Again, the expectation had
There were many other examples of collabora- been that licensing payments would flow mainly
tive research programmes and networks during from firms who had no R&D to those who had
World War II, some of them led by Government. strong R&D. But the first Netherlands Survey of
The American synthetic rubber research pro- R&D in the late 1950s and the UK FBI Survey in
gramme (194221956) is one which has been hotly 1961 both showed that licensing transactions were
debated by historians and economists for a long mainly between firms who already had R&D re-
time [44,62]. Whereas the success of this pro- sources. Since that time, research has demon-
gramme is still a matter of intense controversy, strated that the successful exploitation of im-
there is no disagreement on the achievement of the ported technology is strongly related to the capac-
British war-time radar programme, involving a ity to adapt and improve this technology through
network of innovators from industry, universities indigenous R&D. Again, Japan is an excellent
and the armed forces around a core R&D pro- example [22]. It is not just a question of getting a
gramme at the Government Telecommunications lot of “information”; often there is an overload of
Research Establishment [56]. However, these pro- information. The problem of innovation is to pro-
grammes, although sometimes continued into the cess and convert information from diverse sources
Cold War period, were essentially transitory into useful knowledge about designing, making
arrangements. There were also other more durable and selling new products and processes. Networks
forms of continuing cooperation. were shown to be essential both in the acquisition
Cooperative Research Associations @As) were and in the processing of information inputs.
established in the UK shortly after World War I, Nor are regional and contractor networks a
and in France, Germany and other countries soon new phenomenon. Piore and Sabel [55] provide
afterwards. They were seen as a means of sharing many examples where the externalities generated
the costs of acquiring technical information and of by regional networks of firms have been histori-
testing facilities, pilot plant and prototype devel- cally important since the early days of the in-
opment. They were thought to be mainly a device dustrial revolution. Whilst there are certainly
for overcoming market failure in industries where critics who would disagree with their assessment
the threshold costs of R&D and other scientific of mass production, there are few who would
and technical services were too high for small disagree with this emphasis on the value of re-
firms. In practice, however, many large firms gional networks. Alfred Marshall [43] already
joined RAs in order to take advantage of their pointed to the vital role of externalities in “in-
information, abstracting and translation services. dustrial districts” where, as Dominique Foray [20]
The most sensitive strategically important areas of reminded the Montreal Workshop, “ the secrets of
R&D remained in-house in the large firms for industry are in the air”. Perez and Soete [54] have
competitive reasons [35]. also presented similar convincing arguments on
The expectation had been that RAs would serve the role of externalities for innovation networks in
to provide technical support for firms who were developing countries.
lacking their own R&D and that once they had Thus, both empirical and theoretical research
developed an indigenous technical capability they has long since demonstrated the importance for
might no longer wish to use the services of the successful innovation of both external and inter-
RAs. However, the Federation of British In- nal networks of information and collaboration.
dustries (FBI) [19] survey of R&D showed that Furthermore, it has shown that external networks
502 C. Freeman / A synthesis of research issues

were just as important for firms who had their Table 1

own R&D as for those who had none.
(1) Joint ventures and Research Corporations
What, then, is new about innovation networks
(2) Joint R&D agreements
in the 1980s and 199Os? The next section is an (3) Technology exchange agreements
attempt to answer this question. (4) Direct investment (minority holdings)
motivated by technology factors
(5) Licensing and second-sourcing agreements
(6) Sub-contracting, production-sharing and
2. The growth of networks of innovators in the
supplier networks
1980s and changes in their mode of operation (7) Research Associations
(8) Government-sponsored joint research programmes
First, it is necessary both to define “networks (9) Computerised data banks and value-added networks
for technical and scientific interchange
of innovators” a little more precisely and to dis-
(10) Other networks, including informal networks
tinguish between various types of network. One of
the most interesting recent papers in this field [30]
defines innovation networks as follows:
Network relations of a mainly informal and
Network organisation is a basic institutional tacit nature, exist also within the local environ-
arrangement to cope with systemic innovation. ment, linking through open chains, firms and
Networks can be viewed as an inter-penetrated other local actors.. . our proposal is to use the
form of market and organisation. Empirically term “network” (“reseau”) only in the case of
they are loosely coupled organisations having a explicit linkages among selected partners and
core with both weak and strong ties among to refer to the former as “milieu relationships”
constituent members.. . We emphasise the im- 18, P. 41.
portance of cooperative relationships among
firms as a key linkage mechanism of network Before considering each of the main forms of
configurations. They include joint ventures, cooperation in greater detail it is essential to make
licensing arrangements, management contracts, two observations. First, these categories are not
sub-contracting, production sharing and R&D mutually exclusive and most large firms are in-
collaboration. volved in several of these modes of networking
and many are involved in all. Even quite small
As DeBresson and Amesse 1141 show in their firms may be involved simultaneously in most of
introductory paper, there are many definitions of these forms of cooperation, as is shown by Acs [l].
networks, but the one given by Imai and Baba [30] Moreover, large firms may have many agreements
captures most of the important points in consider- in each category. The Arpo Database at Milan
ing networks of innouators. Enlarging upon and Polytechnic indicates that almost all of the top 20
sub-dividing the types which they distinguish, information technology (IT) firms in US, EC and
table 1 shows the categories of network which are Japan made more than 50 cooperative agreements
relevant from the standpoint of innovation. of various kinds in the 1980s and some made more
Following Camagni [8] this approach does not than a hundred [7]. Kodama [36] points out that
classify regional (or national) networks as a sep- the leading Japanese electronic firms are members
arate category, but rather treats regional (or na- not just of one or two engineering research associ-
tional) elements as constituting a “milieu” which ations but sometimes of a dozen or more at the
may affect any or all of the above, but especially same time. Participation in joint programmes and
category (6). agreements at least for firms in this industry have
become quite a normal way of life.
A network may be defined as a closed set of Second, informal networks (category 10) are
selected and explicit linkages with preferential extremely important but very hard to classify and
partners in a firm’s space of complementary measure. However, just because of this difficulty it
assets and market relationships, having as a is essential to notice that they have a role some-
major goal the reduction of static and dynamic what analogous to “tacit knowledge” within firms.
uncertainty.. . It is now very generally recognised that in the
 C. Freeman / A synthesis of research issues 503

technology accumulation process within firms and many of the Montreal Workshop papers confirm.
other organisations, tacit knowledge is often more For this reason cultural factors such as language,
important than codified formal specifications, educational background, regional loyalties, shared
blue-prints, etc. [51]. Because tacit knowledge is so ideologies and experiences and even common
difficult to communicate, the movement of people, leisure interests continue to play an important role
in addition to documents and drawing, is usually in networking. An appreciation of these sociologi-
essential for effective technology transfer; hence, cal factors in both formal and informal networks
behind every formal network, giving it the breath is a necessary complement to narrower “eco-
of life, are usually various informal networks. Eric nomic” explanations and helps greatly to under-
von Hippel [71,72] has analysed informal know- stand the importance of regional networks, geo-
how “trading” in various US industries, particu- graphical proximity and “national systems of in-
larly in the steel industry, demonstrating its im- novation” [39,40].
portance empirically and providing an economic With these definitions and qualifications in
explanation for its varying intensity in different mind, let us consider the changes in networking in
branches of industry, and its relationship with the 1980s both in terms of quantitative indicators
formal cooperative R&D and formal licensing and of qualitative changes. Many researchers have
arrangements. Few of the Montreal papers dealt attempted to keep track of the new developments
directly with informal networks, although they [7,9,45,49]. One of the most useful sources is the
often touched upon them indirectly. However, the MERIT Data Bank, originally set up by the TN0
paper by Erikson and Hakansson [18] did high- in the Netherlands and now at the University of
light their importance and the Uppsala group have Limburg [25,26]. It is based on public announce-
demonstrated this in much of their other work ments of new agreements and has some bias to-
over the past ten years (see, e.g., [34]). wards European and North American sources. For
Personal relationships of trust and confidence obvious reasons it does not cover category (10) of
(and sometimes of fear and obligation) are im- table 1 and its systematic coverage is confined to
portant both at the formal and informal level, as categories (1) to (6). Nevertheless, it provides a

400

350-

300- +-+‘+\ /
+

250-

\
/

d70 ‘70-‘74 ‘7%‘90 ‘60 ‘01 ‘62 ‘63 b4 ‘65 ‘66 ‘87 ‘a6 ‘69

Fig. 1. Growth of newly established technology cooperation agreements in biotechnology (H), information technologies (+) and new
materials (0) (Source: MERIT-CAT1 data bank [26]).
504 C. Freeman / A synthesis of research issues

Table 2 small firms, which have characterised the early

Modes of technology cooperation in biotechnology, informa-
developments in this technology. Minority equity
tion technologies and new materials (numbers and percentages)
stakes provide a special form of “cooperation” in
Biotech- information New these circumstances.
nology technologies materials
What are described by Hagedoorn and Scha-
Joint ventures, 164 458 111 kenraad [26] as “one-directional technology flows”
research corporations 13.5% 16.9% 25.78
are more important for the more mature informa-
Joint R & D 362 749 173 tion technology and materials technology in-
29.8% 27.6% 25.1% dustries than for biotechnology. Their importance
Technology exchange 84 328 54 in these two areas is partly due to the rapid
agreements 6.9% 12.1% 7.8% growth of second-sourcing agreements. Ordinary
Direct investment 234 357 65
licensing agreements have been growing rapidly
19.3% 13.1% 9.4% for a long time; from the standpoint of network-
ing the growth of cross-licensing and technology
Customer-supplier 186 245 42
relations 15.3% 9.0% 6.1%
exchange agreements is of greater interest. It
should be noted, however, that classification of an
One-directional 183 581 171
agreement as “uni-directional” does not neces-
technology flows 15.1% 21.4% 25.7%
sarily mean that cooperation is unimportant, espe-
Total 1,213 2,718 688 cially in the wider context of a multiplicity of
100.0% 100.0% 100.0%
networking arrangements and a variety of stra-
Source: MERIT-CAT1 data bank [26]. tegic alternatives. Nevertheless, if forms of cooper-
ation were ranked according to the degree of
intensity and equality in the relationship then the
clear-cut confirmation of an extremely rapid order of ranking would probably be from highest
growth of inter-firm innovative networks in bio- to lowest (1) Joint ventures, (2) Joint R&D agree-
technology, materials technology and information m&nts, (3) Technology exchange, (4) Direct invest-
technology in the 1980s (fig. 1) [26].When the ment, (5) Customer-supplier contracts, (6) Licens-
MERIT data is broken down by type of agree- ing and second-sourcing [25]. Moreover, the
ment, it shows some variation by nature of tech- MERIT Data Bank almost certainly understates
nology, but in all categories R & D cooperation the number of one-way licensing agreements be-
agreements account for a quarter or more of the tween firms in the “Triad” and firms in the Third
total (table 2), with joint ventures also being very World since these are far less frequently the sub-
important. Several earlier studies [28,45,46,49] had ject of public announcements.
shown that R & D-motivated joint ventures were So far, we have indicated a few of the more
growing rapidly in the 1970s and 1980s. Mowery important sources which confirm a very rapid
in particular demonstrated their growing impor- growth of various types of R&D cooperation in
tance in international collaboration between US the 198Os, especially in the newer generic technol-
and foreign manufactu~ng firms. The MERIT ogies (categories 1 to 5 in table 1). When it comes
data bank confirmed Mowery’s assessment but to category 6, far more important than sheer
also showed that joint ventures and other forms of quantitative increase in the number of agreements
research cooperation had grown rapidly between has been the qualitative change in the content of
European and Japanese firms. In fact, the “‘Triad” the relationships. This is difficult to demonstrate
of US, Europe and Japan accounted for over 90 statistically, but the evidence from numerdus case
percent of all the agreements recorded and only studies and from the papers at the Montreal
the Asian NICs entered the picture in significant Workshop is strong. So, too, is the evidence from
numbers from outside. the analytical studies of new developments in
As table 2 indicates, direct investment was par- management technologies and productivity trends,
ticularly important in the area of biotechnology. such as the Report of the MIT Commission on
This is primarily due to the special type of sym- Industrial Productivity [15].
biotic relations~ps between large (mainly chem- What all these studies show is that a lot of new
ical) firms and the new (biotechnology based) wine is being poured into old bottles in sub-con-
 .::,
C. Freeman / A synthesis of research usues 505

tractor and supplier networks. The clearest case is

:I:j
undoubtedly that of Japan. Attempts are being
made almost everywhere to imitate some features
of the Japanese model and it is also being spread
by direct Japanese investment. A great deal of

;.
attention has been paid to the Japanese automo-

>.
bile industry and to the workings of the JIT, or

.:
Toyota-Ohno, system in that industry. But per-
haps still more interesting is the example of the
Japanese electronics industry, which has grown
even faster in the past three decades.

I
A recent study of Japanese electronic networks
supporting small and medium-sized enterprises
(SMEs) shows that whereas in the 1950s sub-con- :I.
-‘. :.
tracting firms were viewed in a somewhat conde- ::

.i

scending way as low-cost suppliers who could ‘.:. .:

absorb business fluctuations, this attitude changed >.

t
profoundly over the next three decades, partly 2 3 4
because of shortage of capacity and skills [70].
This analysis is also confirmed by the Japanese
economist, Mari Sako [58] in her studies of the
Fig. 2. Reasons for large enterprises to use sub-contractors.
Japanese electronics industry and the historical
Source: Small and Medium Enterprise Agency, “Shitauka
development of sub-contracting in Japan.
Kigyo Jittai Chosa” (Survey of the State of Sub-contracting
Modification or innovation of a part or compo- Enterprises’), December 1981 and Van Kooij [70]. (w) = All
nent of a product or process by one sub-contrac- manufacturing enterprises; (0) = parent companies which have
tor inevitably affected the manufacturing process introduced mechatronic equipment; (II) = parent companies
which have not introduced mechatronic equipment; 1 = sub-
of the whole. Especially in electronics, innovation
contracting enterprises have specialised technology and
among sub-contractors is subject to the constraint
equipment; 2 = parent company’s production capacity is insuf-
of compatibility with the customer’s (or parent ficient; 3 = production lot is small and outside orders are more
company’s) technology. Therefore, the sub-con- efficient; 4 = reduction of personnel costs and the unit price of
tractor must supply a product according to de- products; 5 = use of sub-contractors enables more flexibility
toward fluctuations in lot size; 6 = enables saving of capital for
tailed specifications which can only be modified
plant and equipment investment, etc.; 7= strong capital and
within certain limits. To a degree this compels
personal ties with sub-contractors; 8 = parent company does
parent companies to offer advice and supply the not have to hold excess inventories; 9 = others. Note: Total
necessary technology to sub-contractors so as to exceeds 100 due to some respondents giving more than one
increase their economic and engineering capabili- response.
ties. This results in a higher dependence on up-
graded sub-contractors because of their special-
ized technology and equipment instead of the improved, a more equal relationship between large
traditional low cost approach. and small enterprises began to develop in many
As fig. 2 shows, technological specialisation cases. Instead of the rigid hierarchy within groups
was given as the main reason for the use of with great prestigious firms at the top and small
sub-contracting by large enterprises in the weak ones at the bottom, the parent-firm trans-
Japanese electronics industry, and the proportion formed its position into a nucleus within an in-
was highest in the case of firms involved in mecha- dustrial combine of “Kogaisha” (“children” or
tronics. Cost and scale of inventories were rela- “daughter” companies). To accomplish this grad-
tively trivial in comparison. This is particularly ual transformation parent companies undertook a
interesting in view of the great emphasis placed on series of activities, of which the main aim was the
inventory control in the JIT system in the automo- improvement of the flow of information from
bile industry. “parent to child” and back, and among the
As the technical competence of sub-contractors “children” themselves. This was achieved by as-
506 C. Freeman
signing the function of liaison to a special depart-
ment within the parent company.
As illustrations, van Kooij gives examples from
Toshiba TV and VCR manufacture, from Mitsu-
bishi’s R&D meetings and Hitachi’s project
groups. In these cases, the object of the associa-
tion was research cooperation and improvement
of managerial and technological competence, even
though the leadership of the large enterprise con-
tinued to prevail. New small ~~-t~hnolo~ firms,
on the other hand, combined together in a more
independent way, forming networks of cooper-
ation for new product and process development
and research interchange. Van Kooij’s account
suggests that technolo~cal requirements played a
big part in transforming the Japanese sub-contrac-
tor networks.
The new developments described by Saxenian
[59] in her paper on technological cooperation in
Silicon Valley in California show some striking
resemblances to these Japanese developments,
particularly her example of the upgrading of
printed circuit board manufacturers. However, the
cooperating firms in her investigation more often
had the characteristics of the relatively small num-
ber of new high tech firms of the Japanese elec-
tronics industry as portrayed by van Kooij. In
both cases technological competence and special-
isation were the basis for rather equal and trusting
relationships between firms who needed each
other’s special capabilities in new product and
systems development.
Imai [29] has argued that the evolution of
Japanese corporate and industrial networks has
gone so far as to constitute a new type of produc-
tion system. He traces the qualitative changes in
the forms of networking from the old pre-war
Zaibatsu networks, based on ownership and con-
trol, to the fuzzier and more flexible type of
networking, based on information exchange be-
tween more equal partners, who may or may not
be affiliated to the same business groups.
In the case of Research Associations (category
7 in table l), an analogous process of qualitative
change can be seen in Japan. As we have seen in
section 1, these were originally established over
half a century ago in Europe, mainly with the
object of strengthening the technical capability of
small firms who lacked R & D. When the Japanese
imitated these European developments much later
they also had in mind assisting small firms. The
/ A synthesis of research issues
law passed in 1961 to set up the “Engineering
Research Associations” (ERAS) envisaged cooper-
ation between government laboratories, especially
MITI’s Mechanical Engineering Laboratory, and
various makers of parts and components, espe-
cially in the automobile industry. The first four
ERAS were in filters, suspensions, indicators and
engine parts and shared the MIT1 laboratory
facilities [37].
As Japanese industry advanced technolo~c~ly,
there was some doubt in the late 1960s as to
whether the ERA type of organisation would be
needed any longer and after the first twelve had
been set up in 196145, no more were created in
196.5-70. But this was followed by a veritable
“boom” in creating ERAS, especially in the early
1980s (25 between 1981 and 1983). However, as
Levy and Samuels [37, p. 321 point out: “both
their raison d’&re and nature of their participants
were transformed”. The new ERAS were mainly in
electronics, information technology, materials
technology and biotechnology and their objects
had shifted to broad areas of advanced technol-
ogy. Large firms came into the ERAS and 30 firms
accounted for nearly one-third of the member-
ships by 1985, with Hitachi participating in 18 and
Toshiba in 16. Government support doubled be-
tween 1977 and 1982, but funding is shared with
industry and industrial associations often col-
laborate with MIT1 in administering the projects.
The total amount of Japanese government sup-
port for industrial R&D is, of course, far less than
in USA or many European countries. But the
mode of support is particularly interesting. Much
of the support comes through special loans or
through tax benefits and these are strongly geared
towards collaborative “networking” projects. By
the late 1980s four-fifths of all government R&D
loans were going to joint projects which included
not only the ERAS but many other types of
“centres”, “consortia”, “forums” etc.
The apparent success of many of these col-
laborative projects and programmes led to
widespread imitation of this technique of organi-
sation and funding, both in Europe and the United
States. The British Alvey Programme (1983-87)
was established as a direct result of a study of
Japanese initiatives in “5th Generation Comput-
ing”, and similar programmes were started in
several other European countries and in the United
States [3]. They were all based on the principle of
 C. Freeman / A synthesis of research issues 501

the ERAS temporary coalitions of large (and some ing which however have been very little re-
small) firms, with participation of universities and searched.
government laboratories and joint funding by in-
dustry and government.
So prevalent did this new mode of funding 3. Causes of the changes in networking for innova
become in the 1980s that by the end of the decade tion
about two-thirds of the European Community Re-
search Budget was disbursed in this form for the The last section has brought together and sum-
support of the new generic technologies. Mytelka marised some of the available evidence relating to
and Delapierre [48] and Sharp [61] have shown the the growth of innovation networks and the quali-
very important role of ESPRIT in the develop- tative changes in their mode of operation in the
ment of new strategic alliances and networks in 1980s. This section discusses the underlying causes
the European electronic industries. of these changes and their implications for theory
Finally, there remains to consider the 9th cate- and for research in the 1990s.
gory (table 1) of research collaboration, computer When Hagedoorn and Schakenraad [26] ana-
networking. Unfortunately, very little research has lysed the motives for firms to enter into cooper-
been done on this aspect of innovative network- ative agreements with each other, they found that
ing, perhaps because it is the most recent type. But strategies relating to technological competence and
Bar and Borrus [5] given an informative account market positioning predominated. Simple lack of
of the use of various forms of computer network- financial resources to fund design and develop-
ing by innovative US firms, particularly Hewlett- ment accounted for only a very small number of
Packard. It also plays a very important part cases, mainly in new biotechnology firms. Even in
alongside other networks in the Japanese system these cases, of course, whilst the small new firms
and is specifically mentioned by van Kooij [70] in were motivated by the need to finance R&D, their
relation to the Toshiba VCR network. Thomas larger partners were often primarily motivated by
and Miles [68] have given a general account of the long-term strategic considerations.
rapid growth of telematic services in the UK in Especially in information technology and mate-
the 1980s and of their relevance to innovation and rials technology agreements, technological com-
diffusion of innovations. Jagger and Miles [33] plementarity and reduction of lead times were
show that scientific data and economic informa- very frequently diagnosed as the dominant mo-
tion were the main growth areas in the 1980s. But tives for R&D cooperation. They were also im-
in-depth case studies of the experience of data portant for joint ventures, but in this case the
banks and value-added networks are still few and strongest single motive related to market expan-
far between. sion and strategic positioning in new markets. In
To sum up this discussion of the changing general, Hagedoorn and Schakenraad found that,
patterns of collaboration in innovative networks in contrast to much of the previous literature,
in the 1980s: there have indeed been some major considerations of cost-sharing and cost-minimis-
changes both quantitatively and qualitatively. In ing appeared to play a relatively small role in
quantitative terms there is abundant evidence of a comparison with strategic objectives relating to
strong upsurge of various forms of research col- new technology and markets.
laboration, especially in the new generic technolo- Most of the papers at the Montreal Workshop
gies (categories (1) to (5) in table l), involving also testify to the importance of technological
extensive international collaboration as well as complementarities, shortening lead times and
national and regional networks. There is also am- strategic objectives. Saxenian [59], in particular,
ple evidence of a qualitative change in the nature brings out these factors very strongly in relation to
of the older networking relationships which have the development of new computer systems in Sili-
existed for a long time: sub-contracting networks con Valley. She argues that firms would have
(6) Research Associations (7), government R&D simply been unable to compete if they had not
projects and programmes (8). Finally, com- been willing to enter into a variety of forms of
puterised data banks and value added networks technological cooperation. Because of the ex-
(9) provide entirely new possibilities for network- tremely rapid pace of technical change and the
508 C. Freeman
broad range of specialised technological capabili-
ties needed for system development, there was
simply no time to go it alone. The work of Camagni
and Gambarotto [9] and of Cainarca et al. [7]
reinforces these points, whilst Mowery [46] con-
cludes that:
Technological developments in a number of
industries also have increased the importance
of access to new or unfamiliar technologies.. .
Collaboration can provide more rapid access to
technological capabilities that are not well de-
veloped within a firm and whose development
may require a large investment and consider-
able time [46, p. 251.
Taking this together with the quantitative evi-
dence from the MERIT Data Bank, it is abun-
dantly clear that the main source of change un-
derlying the new developments in networking for
innovation lies in the rapid development and dif-
fusion of new generic technologies and especially
information technology. Imai and Baba [30] sum it
up as follows:
Information Technology exerts a strong impact
on the entire range of existing products and
services. Eventually it renovates the total sys-
tem. The dominant mode of innovation is sys-
temic... The interactive process of information
creation and learning is crucial for systemic
innovation. Interaction includes three dimen-
sions: between users and suppliers, between
R&D, marketing and manufacturing and be-
tween physical products, software and services.
Table 3 illustrates this point in the case of the
transport sector. The change in the patterns of
innovation from the energy-intensive products and
systems of the 1950s and 1960s to the com-
puterised control systems of the 1970s and 1980s
is very striking. Systemic innovations, such as
containerisation, were of course very important in
the early post-war period and so, too, was the
energy-saving achieved by scaling up. But the
technical complexity of containerisation was not
great and intensive technical collaboration be-
tween firms was not the main requirement for its
successful development. In the case of the sys-
temic innovations of the 1970s and 1980s on the
other hand, innovation networks were necessary
/ A synthesis of research issues
Table 3
Innovations in the transport sector 1940s to 1980s
(1) System innovations and economies of scale to take advantage
of low cost oil-intensive technology (1940s to 1960s)
Containerisation
Unitisation
Roll-on, roll-off
Oil and gas pipelines
Dieselisation of railways
Scaling up size of trucks (to 38 tons)
Scaling up size of aircraft (from DC3 to 747)
Scaling up size of tankers (from 20,000 dwt to 500,000 dwt)
Scaling up of port facilities to handle large tankers,
roll-on, roll-off, containerisation and unitisation
(2) Information and control innovations to take advantage of
increasingly low cost electronics and computing (1960s to
1980s)
Radar and computer-controlled airport traffic
Computerised airline booking systems
Aircraft instrument landing systems and flight control
systems
Computerisation of railway marshalling yards
Computerisation of railway signalling systems
Computerisation of road haulage and delivery systems
Unmanned trains
Tachograph
Computerisation of travel agencies
Computerisation of road traffic control systems
Source: derived from Working paper by IM Brodie, Transport,
TEMPO Sector Study, SPRU, (mimeo) March 1984.
for the development of the original electronic
equipment (circuits, hardware, peripherals, instru-
ments, etc.) and even more so for the new applica-
tions, especially in relation to customised soft-
ware.
We therefore have to consider some of the
specific features of information technology which
have led to the more technology-intensive and
more numerous innovation networks of the 1980s.
Here the theory of techno-economic paradigm
change developed by Carlota Perez [52,53] offers
the most convincing explanation. Whereas other
writers (e.g. Dosi et al. [16]) used the expression
“change of technological paradigm” to describe
fundamental changes in the technology of a par-
ticular industrial sector, she pointed to the fact
that some changes of paradigm are so pervasive,
because they offer such a wide range of technical
and economic advantages, that they affect the
behaviour of the entire system, changing the
“common-sense” rules of behaviour for engineers,
managers and designers in many sectors or in all,
 C. Freeman / A synthesis of research issues 509

as well as their inter-sectoral relationships and technologies and the strategic re-positioning of
technological complementarities. many established firms as they try to cope with
Clearly, information technology is such a case. the rapid structural and technical change affecting
Not only has it found applications in every their markets and their very existence. If we take
manufacturing and service sector, often changing into account also the international aspects of pro-
profoundly both products and processes, but it duction, marketing and technology development,
also affects every function within each firm: de- then clearly a period of great turmoil could have
sign (CAD); manufacture (robotics, instrumenta- been expected in the 1980s with many new stra-
tion, FMS, control systems, CIM, etc.); marketing tegic alliances and networks. This is, indeed, the
(computer-based inventory and distribution sys- picture which emerges from the MERIT Data
tems) accounts and administration (management Bank and other similar sources. The need for
information systems, etc.). Finally, it affects, firms in the “Triad” countries to gain access to
through its convergence with the telecommunica- partners in each of the three main areas (EC,
tions system, the network of communications Japan, USA) was one of the main driving forces.
within the firm and between the firm and its Hagedoorn and Schakenraad [26] have suggested
supplier networks, technology networks, customer that the apparent downturn in numbers of new
networks, etc. In this last area it provides entirely networking agreements in the late 1980s (fig. 1)
new possibilities for rapid interchange of informa- may have been due to the fact that a great deal of
tion. data, drawings, advice, specifications, and so strategic re-positioning for the single European
on between geographically dispersed sites via fax, market had already been completed. By the same
VANS, electronic mail, teleconferencing, distance token, a new wave of agreements affecting the
learning, etc. It is hardly surprising, therefore, that East European countries may be anticipated in the
taking into account both the pervasiveness of IT early 1990s.
and its systemic characteristics, most of the new Even though the Japanese market is far more
developments in networking in the 1980s have homogeneous and smaller than either the US or
been associated in one way or another with the the EC market, strategic factors have certainly
diffusion of this technology. Not only is the IT influenced the networks of European and US firms
industry itself characterised by intensive techno- in their desire to gain access to Japanese technol-
logical networking for the development of its own ogy and markets. Within Japan, as we have seen, a
products (through complementarities in materials, growth in the technology-intensity of supplier net-
components, circuits, sub-assemblies, instruments, works, and government sponsored programmes
final products, software, peripherals, etc.), but its have been a major feature of internal development
diffusion throughout the economy to new sectors in the 1970s and 1980s. The desire of the Japanese
of application depends on the development of new government to promote the transition to an “In-
networks in every sector (banks, machine-tool formation Society” as rapidly as possible has been
makers, travel agents, consultants, airlines, law a major factor in the acceleration of this process
firms, accountants, hospitals, chemical engineers, [22]. One of the participants in the Montreal Semi-
etc. etc.). Finally, it provides the technical means nar, Walter Stohr aptly described the Japanese
for improving communication networks every- economy as “nothing but networks of innovators”.
where and for making them feasible in areas where The desire to emulate Japanese achievements in
they could hardly have been introduced before. It technology has been another major factor in the
is a networking technology par excellence. international acceleration of innovation network-
The world-wide diffusion of this new techno- ing in the 1980s and of qualitative change in the
economic paradigm has led not only to intensified supplier networks of industries.
technical collaboration within supplier networks However, it would be quite wrong to interpret
and between users and producers of IT products the new developments in networking as primarily
and systems, it has also engendered a fierce com- a Japanese phenomenon or exclusively a phenom-
petitive struggle between the suppliers of these enon associated with information technology. The
products and systems. Characteristic of periods of empirical evidence is perfectly clear that similar
change of techno-economic paradigm is the rise of developments affect all the leading industrial
new firms associated with competence in the new countries and indeed “globalisation” is an im-
510 C. Freeman / A synihesis of research issues

portant aspect of the growth of new types of characteristic of the 1970s and 1980s will be fol-
network. Moreover, even if information technol- lowed by a new wave of rationalisation and in-
ogy is the driving force behind most of the new dustrial re-concentration in the 1990s and first
agreements and networks, a similar process affects decade of the twenty-first century.
other rapidly developing generic technologies, such A few of today’s small and medium-sized firms
as materials technology and biotechnology (fig. 1, will become giants of the next century through
table 2). growth. But some key small firms are already
Again, as emphasised in section 1, networking being taken over by larger ones (e.g. Genentech by
for innovation is in itself an old phenomenon and Hoffmann Laroche or Apollo by Hewlett-Packard)
networks of suppliers are as old as industrialised and even quite large firms like Nixdorf or Plessey
economies. Ann Markusen’s 1421 Montreal paper have been swallowed up by even larger firms such
gave a clear reminder that many aspects of the as Siemens and GEC. Examples were given at the
most recent wave of networking agreements were Montreal Workshop of small firm networks which
already clearly evident in the networking of the have already been displaced by networks under
US ~lita~-indust~al complex from World War the control of a large firm. Bressand and Kalypso
II onwards. Particularly interesting is her point [6] suggest that a number of service networks are
that short product life, reduced lead-times, high electronic cartels in the making, particularly airline
technical performance standards, higher quality of reservation systems.
components and materials, accelerated develop- This process of renewed concentration in the
ment and diffusion of new techniques such as NC ICT industries may be compared with similar
and CAD through supplier networks, etc. were all waves of concentration in the evolution of the
major features of the US “networks for innova- automobile industry after World Ware I or the
tion” in weapon systems well before the 1980s. electrical industry in the 1890s (table 4). In the
Despite these very important qualifications, in- early formative period of any major new technol-
formation technology has led to the widespread ogy system, almost by definition there are no
diffusion of modes of networking which were pre- dominant designs or standards and a state of
viously far less common. Whether this is a tem- organisational flux. Innovator-entrepreneu~al
porary phenomenon, to be superseded by a new firms flourish and since there are no standard
wave of vertical integration and industrial con- components labour-intensive techniques are
centration, is a fundamental issue for research to characteristic. But as the technology matures,
which we turn in the final section. economies of scale become more and more im-
portant and standardisation takes place. The pat-
tern of innovation tends to change in ways which
4. Conclusions Utterback and Abernathy 1691 have indicated and
the number of firms falls dramatically, as has
Here we will briefly indicate a few major prob- occurred successively in the electrical, auto and
lems for further research and debate, which have computer industries. This whole long cycle of de-
important policy implications. To begin with, it velopment may be plausibly related to Schum-
will be important to keep track of the trends in peter’s long wave theory, as in the work of Carlota
networking in the 1990s. In one view the upsurge Perez [52].
of new networking arrangements is a transitory An alternative (and not necessarily contradic-
phenomenon of adaptation to the diffusion of new tory) view is that networking between autonomous
generic technologies; as firms become more firms will grow still more important and will be-
familiar with these technologies they will wish to come the normal way of conducting product and
shift the strategically sensitive areas under their process development. Even if some small firms are
direct and immediate control, i.e., to internal&e swallowed up, many more new ones will be born
some of the networks which are now the subject of and will develop such specialised competences that
cooperative arrangements. According to this view, they will be able to enter new networks on rather
the proliferation of new high tech small firms in equal terms with large established organisations.
such areas as CAD, software, inst~ments, per- Networking of various kinds was a normal feature
sonal computers, biotechnology, etc., which was of the industrial and regional landscape long be-
 C. Freeman / A synthesis of research issues 511

fore the advent of modern information technol- case studies on the evolution of networks could be
ogy. IT not only greatly facilitates various forms particularly valuable. But it is also essential to
of networking, but has inherent characteristics, continue the type of data collection on networks
such as rapid change in design, customisation, of all kinds represented by the MERIT data bank,
flexibility and so forth, which, together with its so that we can keep track of the main trends in
systemic nature and the variety and complexity of network formation and decay.
applications, will lead to a permanent shift of Longitudinal case studies would enable us to
industrial structure and behaviour. This will assign gain a better understanding of such complex is-
to networking a greatly enhanced role in the fu- sues as power relationships within networks. Some
ture. authors have stressed the rather equal relation-
Clearly, there is here a rich area for theoretical ships within networks of innovators, whilst others
and empirical research in the 1990s. Longitudinal have pointed to a tendency for the strongest firms

Table 4
Long waves in the development of new technologies

Major features of Formative stage of Rapid growth of techno- Consolidation in new

successive techno- new technology system economic paradigm. Structural dominant technological
economic paradigms crisis of adjustment regime

Electric power 184Os-1870s 188Os-1890s 19oos-1930s

steel
heavy industry

Automobile and IC engine 188Os-1910s 192Os-1930s 194Os-1980s

oil
assembly line

Computers 194Os-1960s 197Os-1980s

chips
telecomms

SMEs Inventor-entrepreneur Many new SMEs in supply Many mergers and take-avers,
Innovator-entrepreneur networks and services deaths. A few grow big.
Spin-offs Some niches survive.

Large firms Diversification into new Large firms come to dominate Oligopolistic global
technologies by a few supply of key products and industries
large firms materials

Technology Radical innovations Scaling up for main products Established systems.

Establishment of scientific and systems. Intense science- Mainly in-house R&D.
principles technology interaction Mainly incremental innovations

Factor-intensity Mainly labour-intensive Becoming capital-intensive Predominantly capital-

intensive

Management Flux. Organic. Emergence of new models of Established textbook

Few management principles management and new management style and
conventional wisdom practice

Standards and design Hardly any established De facto standards of strong Increasingly de jure
standards or designs suppliers sometimes conflicting standards and international
standards

Infrastructure Not yet in place. Competing Heavy investment in new infra- Consolidation of global
ideas for what is needed structure with robust designs infrastructures

Political institutions Informal. Rapidly evolving. Lobbies and professional Political-industrial complex
and social institutions Partnerships mobility associations emerge. Formal inertia and rigidity.
networks. Early lock-in Lock-in
512 C. Freeman / A synthesis of research issues

to exploit their position at the core of the net- A second major set of issues relates to the
works. geography of networking at the regional, national
Clearly this debate about the future of network- and international levels. Here the study of infor-
ing and of industrial concentration is closely re- mal as well as formal networks is particularly
lated to the debate in theoretical economics about important, as well as the trends of innovation
markets, hierarchies and transaction costs [74,75]. networks and strategies within multinational com-
It is notable that many papers and books about panies. Studies of regional and national systems of
networks carry a main title or a sub-title such as innovation could throw a great deal of light on the
“Beyond Markets and Hierarchies” [21] or “Tran- persistence (or otherwise) of geographically cir-
scending Markets and Hierarchies” [30]. Several of cumscribed networks and the reasons for their rise
the papers at the Montreal Workshop also showed (and decline). Pate1 and Pavitt [SO] have main-
this dissatisfaction with the market/hierarchy tained that innovation activities are an important
dichtomy (e.g., Foray [20], Storper and Harrison case of “non-globalisation” whilst Business Week
[63]) and urged that networking should not be (1990) runs a special feature on the “Stateless”
explained primarily in terms of “costs”, whether Corporation. The statistics on R&D performance
transaction costs or others, but should rather be by multinationals outside their main base are still
examined in terms of strategic behaviour, ap- very inadequate, but this does seem to be increas-
propriability, technological complementarity and ing from a very low base. However, purely
other complementary assets [66,67] and sociologi- quantitative analysis is inadequate here. The na-
cal factors such as inter-personal relationships of ture of R&D and other technical activities per-
trust and confidence, and professional ethics of formed in each location are clearly of great impor-
cooperation. tance in relation to the large companies’ own
It is not without interest that the idea of net- networks and their external linkage, agreements
works as a “third form” intermediate between and strategies.
markets and hierarchies was originally suggested This whole area of research has very direct
by Williamson himself in a footnote about the relevance to policy-making at the regional, na-
Japanese zaibatsu. But Goto [23] points out that tional and international level, as shown by De-
he regarded this as a “culturally specific” Japanese Bresson [13]. It is one where the contribution of
phenomenon. Goto himself argues that although economists is vital but which cannot be left to
networking modes of organisation have been espe- economists because of the many subtle questions
cially important in Japan, they have a much wider of a sociological and political nature, both in
economic significance: relation to informal and formal networks. As in
most of the major issues a network approach by
In the case of the post-war Japanese economy, social scientists themselves is essential. The
with its high overall rate of growth and rapid Montreal Workshop showed that such an ap-
changes in its inter-industry structure, associ- proach, particularly between geographers,
ated with a high rate of technical change, there economists and organisational theorists can be
was a favourable situation for the group mode very fruitful.
of transaction to be relatively more efficient
than the market mode or internal organisation
mode of the carrying out of transactions.
References
It is notable that Japanese economists and
historians have particularly stressed the impor- [l] Z.J.L. Acs, High Technology Networks in Maryland, paper
tance of alternatives to markets and hierarchies presented at Montreal Conference on Network Innova-
and their growing importance with the rise of tors, May 1990.
information technology [29,30,37]. But many [2] M. Aoki, Horizontal versus Vertical Information. Struc-
ture of the Firm, American Economic Review 76 (5) (1986)
European and American economists and geogra-
971-983.
phers have also stressed the importance of either [3] E. Arnold and K. Guy, Parallel Convergence- National
displacing Williamson’s theory or developing it Strategies in Information Technology (Pinter, London,
further [64]. 1986).
 C. Freeman / A synthesis
(41 Y. Baba, Japanese Colour TV Firms. Decision-making
from the 1950s to the 198Os, D. Phil. dissertation, Univer-
sity of Sussex (1985).
[5] F. Bar and M. Borrus, From Public Access to Private
Connections: Network Strategies and Competitive Ad-
vantage, Report to OECD Conference on Information
Networks and Competitive Advantage, Paris, October
1989 (Berkeley Roundtable).
[6] A. Bressand and N. Kalypso, (eds.), Strategic Trends in
Services: an Inquiry into The Global Service Economy
(Harper and Row, New York, 1989).
[7] G.C. Cainarca, M.G. Colombo and S. Mariotti, Accordi
tra imprese nel sistema industriale dell’informazione e
della comunicazione, in: G.C. Cainarca et al., Tecnologie
dell’informazione e accordi rra imprese (Milano, 1989).
[S] R.P. Camagni, Local Milieu, Uncertainty and Innovation
Networks, paper presented at Montreal Conference on
Network Innovators, May 1990.
[9] R. Camagni and F. Gambarotto, Gli accordi di cooper-
azione e le nuove forme di sviluppo esterno alle imprese,
Economia e Politica Industriale 58 (1988).
[lo] C.F. Carter and B.R. Williams, Industry and Technical
Progress (Oxford University Press, Oxford, 1957).
[ll] C.F. Carter and B.R. Williams, The Characteristics of
Technically Progressive Firms, Journal of Indusrrial Eco-
nomics 7 (2) (1959) 87-104.
[12] F.J. Contractor and P. Lorange, Cooperative Strategies in
International Business (Lexington Books, Lexington,
Mass., 1988).
[13] C. DeBresson, Breeding Innovation Clusters: a Source of
Dynamic Development, World Development 17 (1) (1989)
l-16.
[14] C. DeBresson and F. Amesse, Networks of Innovators: A
Review and Introduction to the issue, Research Policy 20
(1991) 363-379.
[15] M. Dertouzos, R. Lester and R. Solow (eds.), Made in
America, Report of the MIT Commission on Industrial
Productivity (MIT Press, Cambridge, 1989).
[16] G. Dosi, C. Freeman, R. Nelson, G. Silverberg and L.
Soete, (eds.), Technical Changes and Economic Theoty
(Pinter. London, 1989).
[17] J.L. Enos, Petroleum Progress and Profits (MIT Press,
Cambridge, 1962).
[18] A. Erikson and H. H&konsson, Getting Innovations out of
Supplier Networks, paper presented at the Montreal Con-
ference on Network Innovators, May 1990.
1191 Federation of British Industries (FBI), Industrial Research
rn Manufacturrng Industy (FBI and NIESR, London,
1961).
[20] I>. Foray, The Secrets of Industry are in the Air: In-
dustrial cooperation and the organizational dynamics of
the innovative firm, Research Pohcy 20 (1991) 393-405.
[21] M. Fransman, Beyond the Market: Cooperation and Com-
petition in the Creation of Advanced Computing and Elec-
tronics Technologies in the Japanese System, forthcoming.
[22] C. Freeman, Technology Policy and Economic Perfor-
mance: Lessons from Japan (Pinter, London, 1987).
1231 A. Goto, Business Groups in a Market Economy,
European Economic Reviews (1982) 53-70.
[24] A. Grubler, The Rise and Fall of Infrastructures (Physica-
Verlag, Heidelberg, 1990).
of research issues 513
[25] J. Hagedoorn, Organisational Modes of Inter-firm Coop-
eration and Technology Transfer, Technouarion 10 (1)
(1990) 17-30.
[26] J. Hagedoorn and J. Schakenraad, Strategic Partnering
and Technological Cooperation, in: C. Freeman and L.
Soete (eds.), New Explorations in the Economics of Techni-
cal Change (Pinter, London, 1990) ch. 1.
[27] H. HIkansson and J. Johanson, Formal and Informal
Cooperation Strategies in International Industrial Net-
works, in: F.J. Contractor and P. Lorange (eds.), Cooper-
atioe Strategies in International Business (Lexington Books,
Lexington, Mass., 1988).
[28] K.J. Hladik, International Joint Ventures (Lexington
Books, Lexington, Mass., 1985).
[29] K. Imai. Evolution of Japan’s Corporate and Industrial
Networks, in: B. Carlsson (ed.), Industrial Dynamics
(Kluwer, Dordrecht, 1989) ch. 6.
[30] K. Imai and Y. Baba, Systemic Innovation and Cross-
Border Networks: Transcending Markets and Hierarchies
to create a new techno-economic system, OECD, Con-
ference on Science Technology and Economic Growth,
Paris, June 1989.
[31] K. Imai and H. Itami, Interpretation of Organisation and
Market, International Journal of Industrial Organisation
(1984) 285-310.
[32] K. Imai et al., Managing the New Product Development
Process: How Japanese Companies Learn and Unlearn,
in: K.B. Clark et al. (eds.), The Uneasy Alliance: Manag-
ing the Producrivity-Technology Dilemma (Harvard Busi-
ness School Press, Boston, 1985).
[33] N. Jagger and I. Miles, New Telematic Services in Europe.
in: C. Freeman, M. Sharp and W. Walker (eds.), Technol-
OQ and rhe Future of Europe (Pinter, London, 1991) ch. 9.
[34] J. Johanson and L-G. Mattson, Inter-organisational Rela-
tions in Industrial Systems: a Network Approach com-
pared with the Transaction Cost Appraisal, Internationa!
Studies of Management and Organrsation XVII (I) (1987)
34-48.
[35] P.S. Johnson, Cooperarion Research in Indusrty: An Eco-
nomic Study (Wiley, New York, 1973).
[36] F. Kodama, Rivals’ Participation in Collective Research:
Economic and Technological Rationale, NISTEP Con-
ference, Tokyo, 2-4 February 1990.
[37] J.D. Levy and R.J. Samuel, Institutions and Innovation:
Research Collaboration as Technology Strategy in Japan,
Centre for International Studies, MIT (Mimeo) (1989).
[38] B-A. Lundvall, Product Innovation and User-Producer
Interaction (Aalborg University Press, Aalborg, 1985).
[39] B-A. Lundvall, Innovation as an Inter-active Process;
From User-Producer Interaction to the National System
of Innovation, in: G. Dosi et al. (eds.), Technic& Change
and Economic Theory (Pinter, London, 1988).
[40] B-A. Lundvall, From Technology as a Productive Factor
to Innovation as an Inter-active Process, paper presented
at Montreal Conference on Network Innovators, May
1990.
[41] M.A. Maidique and B.I. Zirger, The New Product Learn-
ing Cycle, Research Policy 14 (1984) 299-313.
[42] A. Markusen, The Military Industrial Divide: Cold War
Transformation of the Economy and the Rise of New
514 C. Freeman / A synthesis of research issues

Industrial Complexes, paper presented at Montreal [60] J.A. Schumpeter, The Instability of Capitalism, Economic
Workshop on Network Innovators, May 1990. Journal (1928) 361-386.
[43] A. Marshall, Principles of Economics (Macmillan, London [61] M. Sharp, The Single Market and European Technology
1890) ch. 10. Policies, in: C. Freeman, M. Sharp and W. Walker, (eds.),
[44] P.J.T. Morris, The American Synthetic Rubber Research Technology and the Fufure of Europe (Pinter, London,
Programme (University of Pennsylvania Press, 1989). 1991).
[45] D.C. Mowery (ed.), Internariona~ Coitaborative Yentures [62] R. Solo, Research and Development in the Synthetic
@allinger, Cambridge, 1988). Rubber Industry, pUarrer& Journal of Economics 68 (1954)
[46] D.C. Mowery, Collaborative Ventures between US and 61-82.
Foreign Manufacturing Firms, Research Policy 18 (1) [63] M. Storper and B. Harrison, Flexibility, Hierarchy and
(1989) 19-33. Regional Development: The Changing Structure of In-
[47] R. Mueser, Identifying Technical Innovations, IEEE dustrial Production Systems and their Forms of Gover-
Transacrions in Engineering Management EN-32 (4) (1985) nance in the 199Os, Research Policy 20 (1991) 407-422.
158-176. [64] M. Storper and R. Walker, The Capiralist Imperutioe:
[48] L. Mytalka and M. Delapierre, The Alliance Strategies of Territov, Technology and Industrial Growth (Basil Black-
European Firms in the IT Industry and the Role of well, Oxford, 1989).
ESPRIT, Journal of Common Market Studies 26 (2 (De- [65] Ii. Takeuchi and I. Nonaka, The New Product Develop-
cember 1987). ment Game, Haruard Business Review (Jan-Feb 1986)
[49] OECD, Technological Agreements Between Firms (OECD, 137-145.
Paris, 1986). [66] D.J. Teece, Profiting from Technological Innovation: Im-
[50] P. Pate1 and K. Pavitt, Large Firms in the Production of plications for Integration, Collaboration, Licensing and
the World’s Technology: An Important Case of Non- Public Policy, Research Policy 15 (6) (1986) 285-305.
globalisation, Journal ofInternational Business Studies, 22 [67] D.J. Teece, Technological Development and the Organisa-
(1) (1990) l-21. tion of Industry. OECD Conference on Science, Technol-
[51] K. Pavitt, International Patterns of Technological Accu- ogy and Economic Growth, Paris, June 1989.
mulation, in: N. Hood (ed.). Strategies in GIobaf Competi- [68] G. Thomas and I. Miles, TeIematics in Transirion; The
tion (Wiley, New York, 1986). Development of lvew Inter-active Services in the UK (Long-
[52] C. Perez, Structural Changes and the Assimilation of New mans, London, 1989).
Technologies in the Economic and Social System, Futures [69] J.M. Utterback and W.3. Abernathy, A Dynamic Model
15 (5) (1983) 357-375. of Product and Process Innovation, Omega 3 (6) (1975)
[53] C. Perez, Micro-electronics, Long Waves and World 639-656.
Structural Change: New Perspectives for Developing [70] E.H. Van Kooij, Technology Transfer in the Japanese
Countries, World Development 13 (3) (1985) 441-463. Electronics Indusrry, Economic Research Institute for
[54] C. Perez and L. So&e, Catching up in Technology Entry Small and Medium-sized Business, Zoetermeer, The
Barriers and Wiridows of Opportu~ty, in: G. Dosi et al. Netherlands, 1990.
(eds.), Technical Change and Economic Theory (Pinter, [71] E. Von Hippel, Cooperation between Rivals: Informal
London, 1988). Know-how Trading, Research Policy 16 (5) 291-302.
[5S] M.J. Piore and C.F. Sabel, The Second Industrial Divide [72] E. Von Hippel, The Sources of Innovation (Oxford Univer-
(Basic Books, New York, 1984). sity Press, Oxford, 1988).
[56] M.M. Postan, D. Hay and J.D. Scott, Design and Devel- [73] E. Von Hippel, Cooperation between Rivals: Informal
opment of Weapons, in: The Official History of the Second Know-how Trading, in: B. Carlsson (ed.), Industrial Dy-
World War (HMSO, London, 1964). namics (Kluwer, Dordrecht, 1989) ch. 7.
1571 R. Rothwell et al., SAPPHO Updated, Research Poficy 3 [74] O.E. Williamson, Markers and Hierarchies: Analysis and
(3) (1972) 259-291. Industry Impl~catians (Free Press, New York, 1975).
[XX] M. Sako, Neither Markets nor Hierarchies: a Comparative 1751 O.E. Wil~amson, The Economic Ins?itu~io~ of Capitalism
Study of the Printed Circuit Board Industry in Britain and (Basic Books, New York, 1985).
Japan, Industrial Relations Department, London School [76] E. Woodward, Srructure 01 Industrial Research Associu-
of Economics (Mimeo) (1989). tions (OECD, Paris, 1965).
[59] A.L. Saxenian, The Origins and Dynamics of Production
Networks in Silicon Valley, Research Policy 20 (1991)
423-437.