Building Innovation Networks: Issues of Strategy and Expertise

This article investigates the role of networks in new product development by reporting on a contemporary case study of a firm in the defence electronics sector. A specific focus is the development and ongoing management of a network that comprises a number of formal inter-firm strategic alliances. The paper begins by reviewing earlier literature on technology strategies for innovation that has identified a key role for inter-firm networking in the organization and management of new product development. We then consider the related issue of the relevant management expertise, which enables firms to adopt a network approach to their strategy for innovation by developing a competence in the process of network building. In this particular case study the critical issue centred upon the extent of the internal resources in terms of time and personal effort that was devoted to building trust and actively managing various inter-firm relationships over time. The article concludes that while inter-firm networking can facilitate new product development across firm boundaries, it is not a panacea for success. Whilst financially successful in terms of product and market development, the networking strategy has also set up problems within the particular case study firm in terms of resourcing and managing the very growth that has been generated.

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