Networking and innovation: a systematic review of the evidence

Porter and Ketels' (2003) study of British competitiveness emphasised the importance of business networking for innovativeness. Until recently insights into the dynamics of this relationship have been fragmented. This paper presents a systematic review of research linking the networking behaviour of firms with their innovative capacity. We find that the principal benefits of networking as identified in the literature include, risk sharing; obtaining access to new markets and technologies; speeding products to market; pooling complementary skills; safeguarding property rights when complete or contingent contracts are not possible; and acting as a key vehicle for obtaining access to external knowledge. The evidence also illustrates that those firms which do not cooperate and which do not formally or informally exchange knowledge limit their knowledge base on a long-term basis and ultimately reduce their ability to enter into exchange relationships. At an institutional level, national systems of innovation play an important role in the diffusion of innovations in terms of the way in which they shape networking activity. The paper provides evidence suggesting that network relationships with suppliers, customers, and intermediaries such as professional and trade associations are important factors affecting innovation performance and productivity. Where networks fail it is due to inter-firm conflict, displacement, lack of scale, external disruption and lack of infrastructure. The review identifies several gaps in the literature that need to be filled. For instance, there is a need for further exploration of the relationship between networking and different forms of innovation, such as, process and organisational innovation. Similarly, we need better understanding of network dynamics and network configurations, as well as the role of third parties such as professional and trade associations. Our study highlights the need for inter-disciplinary research in these areas