THE RELATIONSHIP BETWEEN

INNOVATION AND
GLOBALIZATION

Global Networks and Innovation – BUSI1603

Lecture 01

Course Leaders:
Bruce Cronin – b.cronin@gre.ac.uk
Nicola Perra – n.perra@gre.ac.uk
 • Course introduction

AIMS OF THE
• The innovation/globalization debate
LECTURE
• The emergence of new players

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GLOBALIZATION
INTRODUCING THE COURSE
THE COURSE TEAM
• Course Leaders:
– Prof Bruce Cronin
• b.cronin@gre.ac.uk – 020 8331 9786
• Office Hours (QA112): Mon 10-11; Tues 10-11
– Dr Nicola Perra
• n.perra@gre.ac.uk – 020 8331 8625
• Office Hours (QA101): Mon 2-3pm; Tues 10-11
• Course Tutors:
– Team of tutors with expertise in International Business,
Innovation and Social Network Analysis, involved for lab
sessions and tutorials

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GLOBALIZATION
INTRODUCING THE COURSE
THE COURSE MATERIALS
• Recommended course textbooks – see course guide

• Course website (Moodle)

– Lecture slides & course guide
– Announcements
– Post your questions about the course (do not email for
general queries)
– Engagement used for assessment purposes

• Further readings
– On specific topics
– Tutorial activities

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GLOBALIZATION
INTRODUCING THE COURSE
THE COURSE STRUCTURE
• 11 weeks
– 5 Modules

• Lecture – presentation of theories

• Tutorial – application of theories through case study

• Lab session – development of new IT skills, performing

analysis on given dataset

• Major core course in the programme.

– Expected to commit 20 hours a week to:
– these activities
– assignment preparation

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GLOBALIZATION
INTRODUCING THE COURSE
THE COURSE PHILOSOPHY
• Active participation
– Case studies
– Bringing to the attention of the class interesting and
relevant material

• Informal atmosphere
– your ideas
– what you want to know more about

• Interaction of theoretical models with real life cases and

business situations

• Detailed information about course structure and organization

during first tutorials

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WHY GLOBAL NETWORKS AND INNOVATION?
TWO POPULAR CONCEPTS!
• Do you think innovation is important? Can you give me
an example of an innovative company?
– www.menti.com code 39 80 46

• Please raise your hand if you are on Facebook,

Instagram, Linkedin, or Twitter….

– Ok, everybody is on at least one “social networking site”

– But a social networking site, is different from a social
network, which is different from Social Network
Analysis…

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GLOBALIZATION
WHY GLOBAL NETWORKS AND INNOVATION?
THE IMPORTANCE OF INNOVATION (GOFFIN AND MITCHELL, 2010)
• Innovation and business cycles
– Innovation as the engine of economic development
(Schumpeter’s creative destruction)

• Innovation and employment

– Job creation vs Job substitution/relocation
– Role of SMEs in generating innovation and creating jobs

• Innovation and company performance

– Innovation is a strategic priority, but relationship with
profitability is not always empirically evident

• Innovation and growth

– Correlation between product innovation, market share and
growth
LECTURE 01 – THE RELATIONSHIP BETWEEN INNOVATION AND
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GLOBALIZATION
WHY GLOBAL NETWORKS AND INNOVATION?
NETWORKS, STRATEGY AND ORGANIZATIONS
• From economies of scale and scope, to network externalities
(McGee, Thomas, Wilson & Sammut-Bonnici 2005)
• From traditional supply chains to “ecosystems”, where value is
“co-created, co-converted and co-captured” (El Sawy & Pereira
2012, p. 6).
• From organizations to meta-organizations, which “comprise
networks of firms or individuals not bound by authority […],
but characterized by a system-level goal” (Gulati, Puranam &
Tushman, 2012:573)
Ad. from (Gulati et Low-stratification/heterarchical High-stratification/hierarchical
al, 2012:576) decision making decision making
Closed boundaries Closed community: consortia, Extended enterprise: OEM-
technical standards committees supplier networks, franchising
Open boundaries Open community: Wikipedia, Managed ecosystem: Android
Open Source Software Operating System

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GLOBALIZATION
WHY GLOBAL NETWORKS AND INNOVATION?
THE RELATIONSHIP BETWEEN TRADE, INNOVATION AND
GLOBALIZATION

Trade
Economic growth
Innovation +
diffusion Improvement in
living standards
Innovation

GLOBALIZATION

Source: Ahmed and Shepherd, 2010:19

• Innovation as a process

• Number of actors involved – firms, gov reg, gov dev, consumers

• The systemic nature of innovation

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WHY GLOBAL NETWORKS AND INNOVATION?
A NETWORK VIEW OF TRADE (DICKEN, 2011:19)

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GLOBALIZATION
WHY GLOBAL NETWORKS AND INNOVATION?
THE DRIVERS OF GLOBALIZATION (AHMED AND SHEPHERD, 2010)
WWW.MENTI.COM
• Homogeneous needs • Economies of scale/scope
• Global customers • Learning and experience
• Global channels • Sourcing efficiency
• Transferable Marketing • Favorable logistic
• Technology development

Market Cost
drivers drivers

Political
Competitiv and
e drivers economic
drivers

• Globalized competitors • Trade policies

• Interdependence of countries • Integration of capital mkts
• Globally binding rules of
law
• Compatible technical stds

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WHY GLOBAL NETWORKS AND INNOVATION?
GLOBALIZATION AND INNOVATION…CAUSE OR EFFECT?
(ADAPTED FROM HILL, 2009)

Stimulates

Globalization Innovation

Drives

Globalization of markets Technological

• merging of national markets • product
• industrial vs consumer goods • process

Globalization of production Market

• sourcing from different location
to leverage differences in cost Strategic
and quality

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WHY GLOBAL NETWORKS AND INNOVATION?
NOT ONLY R&D…

New to market product innovators, 2004-2006

% Innovative firms without R&D Innovative firms with in-house R&D

70

60

50

40

30

20

10

0
Luxembourg

Japan (1999-2001)

Korea (2005-07,
Iceland (2002-04)

Australia (2006-07)
Canada (2002-04,
Netherlands

Norway

Denmark
Belgium

United Kingdom
South Africa (2002-
Ireland

Mexico (2006-07)

Spain

Portugal
Italy
Austria

Chile
Czech Republic

Sweden

Estonia

manufacturing)
manufacturing)

04)
Source: OECD, 2010:23 (online version)

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GLOBALIZATION
INNOVATION AND GLOBALIZATION
…BUT ALSO COLLABORATIVE NETWORKS…

Collaboration on innovation, 2004-2006

Source: OECD, 2010:27 (online version)

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GLOBALIZATION
 10
20
30
40
50
60

0
%
Finland

Chile

Sweden

GLOBALIZATION
Czech Republic

Netherlands

Austria
South Africa (2002-
04)
Belgium

Norway

Estonia

Denmark

Luxembourg
National collaboration only

New Zealand (2006-

… NETWORKS THAT ARE GLOBAL!

07)
Iceland (2002-04)

United Kingdom

LECTURE 01 – THE RELATIONSHIP BETWEEN INNOVATION AND

Ireland

Japan (1999-2001)
Canada (2002-04,
manufacturing)
International collaboration
Firms with innovation driven collaboration, 2004-2006

China

Australia (2006-07)
Korea (2005-07,
manufacturing)
Portugal
WHY GLOBAL NETWORKS AND INNOVATION?

Spain

Germany

Italy
Source: OECD, 2010:27 (online version)

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INNOVATION IN EMERGING MARKETS
TRADE OF BRIC COUNTRIES

• Increasing relevance of high-

tech products on BRIC’s trade

• Predominant role of China, also

due to the presence of foreign
MNCs

• Opportunities and challenges

are associated with BRIC’s
growth

Source: OECD, 2007: 8

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GLOBALIZATION
INNOVATION IN EMERGING MARKETS
THE EMERGENCE OF NEW PLAYERS AND THE INCREASE IN
COLLABORATION
Co-authorship on scientific articles (whole counts)

Source: OECD, 2010:30 (online version)

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 A GLOBAL WORLD…REALLY?
IS THE WORLD REALLY FLAT?
Source: Dicken, 2011: 46/47

Source: OECD, 2010:32 (online version)

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GLOBALIZATION
A GLOBAL WORLD…REALLY?
THE PERSPECTIVE EMPLOYED IN THE COURSE
• In a world with global
connectivity, but local
specificities…

• Which is the appropriate unit of

analysis?
– Country?
– Company?

• Global Production
Networks: Complex
production networks which are
geographically extensive
(blurring traditional
organizational boundaries) and
functionally integrated across
national boundaries (Adapted
Source: Dicken, 2011: 53 from Dicken, 2011: 56)
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GLOBALIZATION
 • Course introduction

• The complex relationship linking

SUMMING UP…
globalization and innovation

• The players in the innovation process

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PREPARATION FOR
NEXT WEEK’S
TUTORIAL
Remember that attending 80%
of the tutorials, being able to
demonstrate your preparation
for the meeting, is a
requirement for full mark
achievement.
To be considered
“attending” you have to
engage during the tutorial
and successfully complete
the tasks given to you
weekly.
LECTURE 01 – THE RELATIONSHIP BETWEEN INNOVATION AND
GLOBALIZATION
Week 1 attendance based on:
– Attendance and active participation to
the tutorial
– Attendance and active participation to
the lab session
– After the tutorial, uploading a group
composition form on Moodle (more
information in the tutorial)
Next week activities:
• Tutorial – The third industrial revolution
• Lab session – Generating and importing
network data
• Consult Moodle to access relevant
resources and to read about required
preparation activities (also for
attendance purposes)
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REFERENCES
See the reading list in the
course guide for complete
references
In the course guide
• Ahmed & Shepherd (2010), Ch. 1 & 10 - Dicken (2011),
Ch. 1 & 2
Other references
• El Sawy, Omar A., and Francis Pereira. Business
modelling in the dynamic digital space. Los Angeles,
California: Springer, 2013.
• Goffin & Mitchell (2010) Innovation Management,
Palgrave Macmillan – Ch. 2
• Gulati, Ranjay, Phanish Puranam, and Michael Tushman.
"Meta‐organization design: Rethinking design in
interorganizational and community contexts." Strategic
Management Journal 33.6 (2012): 571-586.
• Hill (2009) International Business, 7th Ed. McGraw Hill
• OECD (2010) Measuring Innovation: A New Perspective -
online version, available at
http://www.oecd.org/document/22/0,3746,en_41462537
_41454856_44979734_1_1_1_1,00.html
, last accessed Sep 2012
• OECD (2007) Innovation and growth: rationale for an
innovation strategy, available at http://
www.oecd.org/edu/ceri/40908171.pdf#
• Sammut-Bonnici, Tanya and McGee, J., Strategy in the
Digital Economy (October 13, 2010). J. McGee, H.
Thomas & D. Wilson (Eds.), Strategy: Analysis and
Practice (2nd ed.). McGraw-Hill, .

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