Bart Nooteboom

Learning and innovation in organizations and economies

1. Purpose and Scope PART I: BUILDING-BLOCKS 2. Management and Organization 3. Innovation, Entrepreneurship, and Competence 4. Evolution 5. Institutions 6. Knowledge 7. Language PART II: CONSTRUCTION 8. A Theory of Interactive Learning 9. A Heuristic of Discovery 10. An Elaboration with Scripts 11. Integration and Disintegration PART III: APPLICATION 12. Innovation Systems 13. Organizational Learning 14. Conclusions and Further Research 15. Summary

Trust : forms, foundations, functions, failures and figures

Trust is an elusive concept, meaning different things to different people, and so needs to be clearly defined. By focusing on relations within and between firms, this volume produces a clearer definition of trust and its role in the economy. This volume deals with a range of questions such as: what are the roles of trust? What can we trust in? Can trust serve as an instrument for the governance of relations? Is trust a substitute, a precondition or an outcome of contracts? It then goes on to analyze what trust is based on, what its limits are, how it grows and how it can also break down. The role of intermediaries is also discussed. The book goes on to argue that trust goes beyond calculative self-interest and that blind, unconditional trust is unwise. It then examines the paradox of how trust can be non-calculative and yet, not blind. The book also reveals ways to measure and model trust, its antecedents and its consequences.the descriptions and analysis lack balance in several cases. Focusing on one to three cases would allow more in-depth analysis and discussion of the particulars of each case and a greater exploration of the usefulness of frames as the major factor in intractable conflicts. For example, the Quincy Library Group case description drops the reader into the middle of a long-standing conflict without the benefit of understanding its genesis, the broader context surrounding it (the environmental movement), one of the major players (the U.S. Forest Service), or the relevance of important findings or decisions (e.g., records of decision). The Edwards Aquifer case is thoroughly described but could have benefited from greater attention to the impact of several key legal decisions on the persistence and intensity of the conflict. Because some of the issues in the Doan Brook dispute were eventually resolved, its questionable whether that dispute is really an intractable conflict. It is also questionable whether the Colorado Growth-Related Environmental Conflicts were or are actual conflicts at all but, rather, are conflicts in waiting.

An International Comparison

This chapter reviews the empirical results of this study. Section 6.2 presents an international comparison of long-term supply relationships between the United States, Japan and Europe. The empirical evidence indicates that there are strong similarities between the three regions. We do find differences but these differences seem small, particularly relative to the expectations one may have on the basis of received view on systemic differences between “Japanese” and “Western” contracting. Thus, if indeed there were large differences between the Triad’s regions, there now appears to be considerable convergence towards a common underlying logic’ of long-term supply relationships. However, the underlying causal structures have not completely converged into one overall system, and section 6.3 discusses this. Despite all similarities, our results also show remaining differences between the regions. Each of the differences by itself do not explain much; however, when connecting the differences they provide new insights. Section 6.3 concludes that in the US perhaps a “Third Way” has been found. Section 6.4 presents an interpretation of the results. Our empirical results confirm the interactive nature of firm- and relation-specific characteristics. As we conclude, the interactions hint at a dynamic process and we identify various causal loops. These causal loops may lie at the heart of the working of long-term supply relationships. Section 6.5 presents a final review of this study. Among others, it provides several arguments beyond this study that may explain the strong similarities between the Triad’s regions.

INNOVATION AND DIFFUSION IN SMALL FIRMS - THEORY AND EVIDENCE

The article provides an inventory of the strengths and weaknesses of small firms in a dynamic context. To do this it considers verbal accounts of the processes of innovation and diffusion, as well as quantitative studies testing cause-effect relations. It consider both economic and noneconomic factors, concerning issues of motivation, perception and knowledge. First an overall summary is given of the characteristics of small business compared with large business, as a basis for an assessment of strengths and weaknesses. Perhaps the most important characteristic of small business is its diversity, and the article gives the conditions and sources of it. Other core characteristics are small scale, personality and independence of the small firm. From these, derived characteristics, strengths and weaknesses and core strategies can be inferred. From the perspective of the firm, strengths and weaknesses are subsequently analysed for the successive stages of innovation: invention, development, tooling/production, introduction to practice/market. Strengths and weaknesses in diffusion are analysed for the successive stages in the adoption process, as proposed by Rogers. Reference is made to theory and to empirical studies from the literature and from research by the present author.

Inter-firm alliances: analysis and design

Challenging the current flood of mergers and acquisitions this book presents an alternative, more efficient strategy of inter-firm alliances. In the context of recent developments in international business, the discussion takes in alliances between buyers and suppliers, between competitors and between firms in different industries. This theory is illustrated and elaborated with empirical detail from a variety of international case-studies. These studies include the car industry in the US, Europe and Japan, the Dutch photocopier industry and ten European electronic suppliers ...Inter-firm Alliances combines resource-based views, transaction-cost analysis and institutional economics to develop an original and comprehensive theory of inter-firm alliances and a coherent method for managing them.

Trust, Contract and Relationship Development

This article contributes to the debate on the relation between trust and control in the management of inter-organizational relations. More specifically, we focus on the question how trust and formal contract are related. While there have been studies on whether trust and contract are substitutes or complements, they offer little insight into the dynamic interaction between the two. They fail to answer, first, whether contract precedes trust or follows it, in other words, what causal relationship exists between the concepts; second, how and why trust and contract can substitute or complement each other; and third, how the various combinations of trust and contract affect a relationship’s development and outcome. In search of answers, we conducted longitudinal case studies to reveal the relationship between trust, contract and relationship outcome in complex inter-firm relationships. We find trust and contract to be both complements and substitutes and find that a close study of a contract’s content offers alternative insight into the presence and use of contracts in inter-firm relationships.

Towards a Dynamic Theory of Transactions

Standard transaction cost economics (TCE) considers transactions from the perspective of static efficiency. Increasingly, attention is required to dynamic efficiency; to capabilities to exploit transaction relations for innovation. Since innovation is dependent on knowledge and learning, the step from the statics to the dynamics of exchange requires and understanding of the development and acquisition of knowledge, preferences, and meaning, and the role in that of interaction between transaction partners. As a step towards this, the article provides an exploration of theories of knowledge and knowledge development, the relation to language, the role of intersubjective relations, the connection with evolutionary theory and the implications for transaction cost theory.

FIRM SIZE EFFECTS ON TRANSACTION COSTS

Associated with effects of scale, scope, experience and learning there are effects of firm size on transaction costs; in the stages of contact, contract and control. These effects are due to “threshold costs” in setting up contacts, contracts and governance schemes, and to differences with respect to the factors that cause transaction costs: bounded rationality, opportunism, uncertainty and transaction specificity of assets. Implications are considered for firm strategy and public policy.

Inter-Firm Collaboration, Learning and Networks : An Integrated Approach

1. Introduction 1.1 Aims and scope 1.1.1 Questions 1.1.2 Scope 1.1.3 Disciplines 1.2 Concepts and theory 1.2.1 Competence 1.2.2 Knowledge 1.2.3 Decision heuristics 1.2.4 Organization 1.2.5 Institutions 1.2.6 Complementary cognition 1.2.7 Tacit knowledge, absorptive capacity and firm size 1.2.8 Knowledge transfer to small firms 1.2.9 Governance 1.3 Advanced 1.3.1 Cognitive distance 1.3.2 Empirical tests 1.3.5 Evolutionary psychology 1.3.6 Institutions and evolution 1.3.7 Methodological interactionism 1.3.8 Incommensurability 2. Goals 2.1 Goals 2.1.1 Efficiency 2.1.2 Competence 2.1.3 Positioning 2.1.4 Performance 2.2 Concepts and theory 2.2.1 Economies of scale and scope 2.2.2 Economies of time 2.2.3 Innovation 2.2.4 Learning, exploration and exploitation 2.2.5 Communities of practice 2.2.6 Internationalization 2.3 Advanced 2.3.1 Threshold costs 2.3.2 Cycle of discovery 2.3.3 Leaning by internationalization 3. Structure 3.1 Forms 3.1.1 Structure 3.1.2 Ties 3.1.3 Concentration of ownership and control 3.1.4 Cobwebs 3.2 Choice 3.2.1 MA or alliance? 3.2.2 Bad reasons 3.2.3 Joint ventures 3.2.4 Network structure 3.2.5 Licensing 3.2.6 Structures of buyer-supplier relations 3.2.7 External corporate venturing 3.3 Concepts and theory 3.3.1 Third parties 3.3.2 The revelation problem 3.4 Advanced 3.4.1 Location 4. Governance 4.1 Risk analysis 4.1.1 Governance 4.1.2 Relational risk 4.1.3 An audit of hold-up risk 4.1.4 Network effects 4.2 Instruments 4.2.1 Risk control 4.2.2 Strategic orientations 4.2.3 Instruments 4.2.4 Contingencies 4.3 Concepts and theory 4.3.1 Trust 4.3.2 Go-betweens 4.3.3 Hostages 4.4 Advanced 4.4.1 Detailed risk audit 4.4.1.1 Value 4.4.1.2 Switching costs 4.4.1.3 Room for opportunism 4.4.1.4 Intent towards opportunism 4.4.1.5 Overall system 4.4.2 Detailed choice 4.4.2.1 Conditions 4.4.2.2 Problems of governance 4.4.2.3 Examples 4.4.3 Empirical tests 5. Process 5.1 Stages of relations 5.1.1. Beginning 5.1.2. Management 5.1.3. Adaptation 5.1.4. The end 5.2 Networks for exploration and exploitation 5.2.1 Networks for exploration: the competence side 5.2.2 Networks for exploration: the governance side 5.2.3 Networks for exploitation 5.2.4 Contingencies 5.2.5 Conclusion 5.2.6 Empirical evidence 5.2.6.1 Multimedia 5.2.6.2 Biotechnology 5.2.7 Development of clusters 5.2.8 Development of MNCs 5.2.9 Keiretsu5.3 Advanced 5.3.1 Opening game 5.3.2 Closing game 5.3.3 Generic forms of outsourcing 6. Summary and Conclusions 6.1 Integrated theory 6.2 Dyads and networks 6.3 Goals of collaboration 6.4 Forms of collaboration 6.5 Governance 6.6 Process 6.7 Further research

Institutions and Forms of Co-ordination in Innovation Systems

This article shows how institutions enable and constrain forms of co-ordination for inter-organizational relations, and how these affect innovative performance. The analysis is based on a theory of learning and on a theory of relations that combines a social exchange perspective with elements from transaction cost economics. Performance is analysed in terms of production costs, transaction costs, product differentiation, diffusion of innovations, incremental innovation, and radical innovation. The method is illustrated with a comparison between the US and Germany. The first is more flexible and market oriented; the second is more oriented towards inter-organizational networks. Policy recommendations focus on how flexibility and durability of relations might be reconciled.