Title: TOWARD A NETWORK TOPOLOGY OF ENTERPRISE TRANSFORMATION AND INNOVATION
1 TOWARD A NETWORK TOPOLOGY OF ENTERPRISE TRANSFORMATION AND INNOVATION
US Department of Commerce
January 28 2003
2 Central argument
Innovation is not something happening inside enterprises but rather at the network interfaces of enterprises with the business regulatory and institutional environment within which enterprises operate. Innovation is a function of complex interdependencies among highly skilled labor operating within and across knowledge-creating organizations that are nurtured and supported by dynamic and flexible institutional structures. It is the dynamic interdependence of this set of conditions that is increasingly the source of innovation.
For ICT to be able to diffuse throughout the whole economy thus enhancing productivity growth business enterprises and the institutions and culture of society need to undergo substantial change. This is why the agenda of research on the dynamics of enterprise transformation and innovation business competitiveness and economic growth needs to be expanded beyond the level of the enterprise. It needs to be built around the dynamic interrelationships between technological transformations enterprises organizational knowledge-creating capabilities and public institutions.
3 1. ICT knowledge and innovation
1. ICT knowledge and innovation
Innovation is driven by
Highly educated motivated and autonomous labour
Innovation involves three elements
Complexity and differential temporal rhythms
4 2. Organizational dimensions of enterprise transformation
2. Organizational dimensions of enterprise transformation the network enterprise
The process of innovation especially as this applies to organizational and market performance is increasingly becoming a function of open-source networks of cooperation.
The network enterprise
process not task
flat hierarchy / greater employee autonomy
educated workforce / ongoing training
team management / knowledge flow
rewards / remuneration from team performance
measurement of performance based on maximization of customers / suppliers contact and customer satisfaction
networks of alliances to gain new knowledge
5 3. Institutional dimensions of enterprise transformation
3. Institutional dimensions of enterprise transformation clusters of innovation
Clusters of innovation organizational social and institutional matrices that underpin accelerated paces of technological uptake organizational knowledge creation and their deployment for innovation. These matrices incorporate specific sets of relationships of production and management embedded in social and institutional structures that support a culture of entrepreneurship and encourage the development of new business processes geared to innovation.
The key in the competitive position of clusters of innovation is their ability to generate synergy that is the added value that results not from the cumulative economic impact of the critical elements present in the cluster but from their interaction in a way that fosters innovation.
6 In lieu of a conclusion
While there is abundant evidence of structural changes that sustain trends toward globalization of economic processes this does not mean that the comparative difference among localities is disappearing. On the contrary one of the key issues in the growing importance of locality has to do with the modalities and patterns of learning that are implicated in the complex interactions between global and local processes. The distinctive elements that make up the social and economic fabric of regions their economic structures patterns of social and political relations cultural makeup are themselves critical in shaping emerging patterns of economic development and organizational forms. Hence a key determinant of a localitys economic trajectory is the extent to which its social institutions can function as frameworks enabling responses to the challenges of the new competitive environment.
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