Embracing a systems perspective of innovation – Evidence from Ireland on the use of innovation links, 1991 to 2002

Conceptual perspectives on the innovation process have moved dramatically in the past decade from a linear model of the innovation process to one based on an evolutionary or systems perspective of innovation. This has also been referred to as moving from a closed to an open innovation paradigm. In this systems perspective, innovation networks are critical with innovation being driven by interaction and co-operation between firms and other organisations. Empirical research has supported this paradigmatic shift by providing evidence that firms engaged in innovation networks are more likely to undertake innovation, have higher sales from innovation and be growing faster. From a resource based view of the firm this might suggest that the competitive position of the firm is due to their internal resource base being enhanced through external innovation links. For small firms, innovation links may be particularly important in providing access to financial, technological and human resources and increasing the probability of innovation. Together, the conceptual and empirical literatures have encouraged changes in policy initiatives to promote innovation resulting in the formulation of regional and national innovation strategies. This paper draws on longitudinal plant-level survey data in Ireland from 1991 to 2002 (Irish Innovation Panel) to determine if evidence exists to support the conceptual perspective that innovation links have increased in recent years. The data analysis also examines if there have been changes in the intensity of innovation links, and if differences exist in innovation links by firm size, sector, ownership or location over the period. The paper also compares the use of horizontal and vertical links and examines if this has changed over the 1991 to 2002 period. This is significant given increased emphasis on technology transfer initiatives by the public sector in recent years. The paper also examines the extent to which the pattern of innovation links reflect the underlying innovation system and public policy initiatives to promote technology transfer and networking as implemented throughout Ireland from 1991 to 2002.