Regional Institutions and Their Impact on the Connectedness of Firm's Innovation Networks

This article is an in-depth comparative case study of six leading manufacturing firms in the Great Zurich region of Switzerland and the Sichuan province of China. It employs innovation system approach, institutional thickness framework and social network analysis to investigate the regional institutions of the two regions and their impact on the connectedness of the case firms’ internal and external innovation networks. Findings show the impact of regional institutions on the connectedness of the case firms’ innovation networks is mainly manifested in the connections among the case firms’ outside collaborators rather than the direct relations of and within the case firms. The paper opens the black box of firm’s innovation networks and compares different dynamics of firms’ internal and external networks. It argues that firms can build up dense direct network relations for innovation by leveraging their endogenous capabilities even in a thin regional institutional environment. As for promoting collaboration among outsiders for the focal firm’s innovation, regional institutions play a bigger role than the firm’s endogenous capabilities. The paper provides regional policy implications particularly for developing and emerging countries with transitional institutional environment.