International Business and Development Accemic Year 2013/2014

1. Università Degli Studi Di Parma Dipartimento Di Economia International Business and DevelopmentAccemicYear 2013/2014 Cooperation and competitionamongfirms Studends Massimiliano Todaro Paolo Renna Professor Alessandro Arrighetti

2. Innovative Milieu and Social Capital—Complementaryor Redundant Concepts of Collaboration-based RegionalDevelopment? Several theoretical concepts emphasize the importance of socially embedded collaboration for innovation driven regional development. The notions of innovative milieu and social capital both focus on this factor of economic success. Researchers have looked at evolutionary aspects linking industrial districtapproachesor influences of milieu characteristics on the localised production systems of industrial districts and other qualities of successful localities. Social Capital and Innovative Mileulook widelycomplementarywith the common denominatorofephasizing the benefit ofsocialyembeddedinteraction. Introduction

3. Whatis Social Capital

4. The concepts of innovative milieu and social capital Social capital is the expectedcollective or economicbenefitsderivedfrom the preferential treatment and co-operationbetweenindividuals and groups The nature of Social Capital islinkedwithformal and informalrelationships. “social networkshavevalue”

5. Social Capital: two different standpoint In the SociocentricApproachBenefits are regarded as being particularly high when people manage to bridge 'structural holes' that exist between previously unconnected communities. The notion is often associated with ideas of civil society and peoples' deliberate engagement in associations, parties or other institutional forms that aim at supporting societal groups or the populationof a locality. The notion of social capital, which was constructed in analogy to the idea of human capital, bears qualities that get close to milieu characteristics. Basically, social capital is defined as:the sum of the resources, actual or virtual, that accrue to an individual or a group by virtue of possessing a durable network of more or less institutionalised relationships of mutual acquaintance and recognition.

6. Innovative Milieu The set, or the complex network of mainly informal social relationships on a limited geographical area, often determining a specific external 'image' and a specific internal 'representation' and sense of belonging, which enhance the local innovative capability through synergetic and collective learning processes. (centraldefinitionby GREMI)

7. Three mainsetsofelementmark innovative milieu 1. Effectiveactorrelationshipwithinregionalframework 2. Social contactsthatenhanceslearningprocesses 3. Regionalimage and senseofbelonging

8. Do both concepts complement each other? Complementary aspects of the notions of innovative milieu and social capital can be identified with respect to four categories, which represent important relational elements in innovation-based regional development:

9. Our focus: Industrial district in Italy Industrial districtwasinitiallyintroducedastermtodescribean area whereworkersofmonolithicheavyindustry live withinwalking-distanceoftheirplacesof work. The succes of sme-baseditaliandistrictwasone of the mainfactorsthatmotivatedeconomicdevelopementorganizationsacross the world to adopt cluster promotion as an approach to stimulategrowth and job creation.

10. Innovative Milieu and Social CapitalTecnology in regionofAachen Aachensuitswellto illustrate the importanceofbothcretivemileu and social capital forsuccesfulregionaleconomicrestructuring. Aachen hasmanaged to evolve from a regiondominated by oldindustries to an outstandingagglomeration of new tecnology-driver firm. The collaborationofvariousactorshasfundamentallysupportedthistrasformation DistinctiveMileu and social capital play a key rolefor the RegionalEconomicRestructuring

11. ProcessofEconomicRestructuring Empiricalevidenceshighlight positive correlationbetween, the collaborationforinnovatingfirm, and high innovativness. Since the mid-1980s it is started the formation of new enterprises, predominantly in the fields of information technology, engineering consulting, medical and biotechnology. A comparative investigation for 1993-1995 shows that the regionwas particularly successful in generating new high tecnology firms. Start-up centres have been set up in the wider area, which have supported the foundation of over 450 innovation-oriented firms alone, altogether employing the (more realistic) number of about 3,700 people new high technology firms.

12. RegionalEconomicRestructuring Some data: The region's outstanding academic and research institutions, notably the University of Technology (RWTH) Aachen (close to 30,000 students), the Polytechnic College (FH) of Aachen and the public Research Centre (FZ) Jlilich (about 4,300 employees), have been the major basis from which industrial restructuring could successfully emerge. “Aachen features as an outstanding example of industrial transformation to an innovation 'hot spot' at least on the national scale” (Beise & Gehrke, 1998).

13. Aachen: Manifestationsof innovative milieu“Regional restructuring has been associated with positive milieu effects” Impulses come from new co-operative approaches by key actors representing different regional institutions: industrial chambers , institutions of higher education and research, banks. Combing competencies and resources based on pre-existing personal relationships. Common objectives of regional development, triggered by the urge to restructure the economy, harmonize differing interests and add to the milieu-like features of the contact network.

15. AGITregionalassociationforpromotinginnovation and technology transfer By virtue of pre-existing personal friendships of some key actors, a first major step could be implemented by founding the agency AGIT that combining the strengths and complementary competencies of its various participants from institutions of industrial promotion, industrial chambers, higher education, research and industry. AGIT created new infrastructural and programmatic approaches that gave a decisive initial push to regional economic restructuring. One central activity of the agency has been the establishment of technology and start-up centres in the region.

16. Aachen: Manifestationsof social capital When companies growing out of the start-up phase, technology firms often face sector-specific difficulties with respect to work routines, management organization or marketing which can hardly be overcome by virtue of those milieu structures and their services. Additional support becomes vital which appears to better rely on socially embedded relationships among more homogeneous actors: companies of the same sector or age that share common problems and objectives. It is required the stabilising effects of social capital, “business friends” belong to the most important sources of entrepreneurial consulting for technology firms, it is seen as an important asset in the Aachen region

17. Aachen: Manifestationsof social capital the formation of several institutionalized communities of firms in terms of sector-specific industrial associations that have come up in the region in the last decade. REGINA is a combination of more than 100 Aachen-based companies, educational establishments and research institutes. Although competitors in some areas, the mainly small to medium-size enterprises which make up the network have embraced the concept of forming an alliance to bring mutual benefit to all its members. (Regina website) whoworkscloselywith some of the industry associations, has noticed a reduced spirit of competition and increased collaboration among member companies. This straightaway refers to social capital implications

18. Our Focus: The Silicon Valley innovative milieu Introduction: Silicon Valley is one of the leading high-tech regions in the world, Silicon Valley’s success can certainly be traced to the breakthroughs achieved by a group of innovators and entrepreneurs unique regional culture and its special ecosystem have been stressed as prerequisitesforits success. The importance of a set of rules and behaviours that provide a framework for the interactions among individuals with diverse country cultural backgrounds to create Silicon Valley’s innovative milieu.

19. Silicon Valley Silicon Valley has become the symbol for the ability of regions to become leaders of technological change. The importance of local milieus for the creation of cutting edge technologies introduces a geography perspective in global technology competition. A report by JOINT VENTURE SILICON VALLEY NETWORK (2001b) stresses that “geographic clustering of people, companies, and institutions is a powerful mechanism for transferring and augmenting personal knowledge, skills, and experiencequickly".

20. Silicon Valley the orientation of the study is socio-economic. Three crucial assumptions of the study are: • 1. Multinational companies are often characterized by a set of behaviours and norms that are influenced by the business culture of their home country or region. • 2. Silicon Valley’s dynamics are based on the intensive interaction of a set of relevant decision-makers. The common visions and interests. The creation, of a local community and that have been described as Silicon Valley’s regional culture. • 3. When multinational companies open up branches in the Valley, their local integration requires comparably high investments to build up social capital.

21. Silicon Valley: Cultural mix and the dynamism Silicon Valley is one of the most diverse regions in the world in terms of immigrant entrepreneurs, human capital and multinational companies. “Silicon Valley is notoriously a world of strangers; nobody knows anybody else’s mother there. There is no deep history, little in the way of complex family ties, and little structured community…Silicon Valley would be hard-pressed to present the image of the close-knit society. There are different situations and dimensions of the culture and interest we can find: Power distance (relationshipbetweenboss and subordinate in a hierarchy), Uncertainty, Individualism versus collectivism, specific versus diffuse relationships Dynamism, opposition and common interest

22. Silicon Valley: Cultural mix and the dynamism Sharing tacit knowledge through interactive processes based on trust, willingness to share, and mutually beneficial exchange over time is the key. One major basis for this information exchange are intensive connections between all the relevant players in different forms. The complex interaction between companies and individuals in Silicon Valley and the tendency to compete and share information at the same time has been described with the term co-opetition. The most famous example Microsoft VS apple

23. Silicon Valley: Cultural mix and the dynamism • Silicon Valley environment encourages entrepreneurs to take risks. • Moreover, it is underlined that there is a right to fail “Risk is good, failure is not bad.”, which is not as strongly accepted in many other regions of the world. "Creativity is just connecting things. When you ask creative people how they did something, they feel a little guilty because they didn't really do it, they just saw something. It seemed obvious to them after a while. That's because they were able to connect experiences they've had and synthesize new things". Steve jobs

24. ThanksForYourAttention Paolo Renna Matr. 250462 Massimiliano Todaro Matr. 248522