Tuesday, February 21, 2017

Location Can Influence Business Success

What advantages does close proximity of businesses have for product and firm development? According to a study conducted on the Hsinchu District in Taiwan, close proximity results in knowledge spin-offs as a result of people moving and sharing of knowledge between firms. Proximity influences innovative development in technology firms in a way that creates synergy and higher growth (Hu, Linand Chang, 2005). Proximity also increase the likelihood that products will move from the conception to production stages.

Innovation is a messy process where knowledge interacts with available resources in a way that leads to new product development. A significant portion of this growth rests on a person's social networks and the ideas those networks generate. Social learning becomes part of the process of how tightly woven clusters develop to overcome market challenges. 

"the close spatial clustering of technology firms favour repeated knowledge agent spinoffs and high-tech personnel mobility that then clearly influence the innovative activity of technology-based firms (Hu, Linand Chang, 2005)." 

As skilled people move from one company to the next they carry with them product development lessons in a additive manner. They can apply this knowledge to their new jobs in ways that connect corporate intellectual capital. Within their networks companies share information and build off of ideas through social construction that results in developmental synergy. 

While some industry knowledge seeps across international borders the highest states of development occurred with the confines of local clusters. Proximity in this case was an important catalyst to growth. A business that wants to succeed in a particular industry should consider the merits of working next to other businesses to soak in their innovative development.

As an added bonus, clusters made the movement from product conception to mass production more likely. It was a function of how closely they interacted to increase likelihood. When inventors and builders interact together at social clubs, restaurants, bars, and sports lounges things start to happen. Walking across the street and handing an engineer a set of plans can make a big difference. 

The study helps us understand that proximity and social interaction in places like the Hsinchu District of Taiwan produce opportunities for innovative synergy that results in new product development. When clusters are designed with innovative growth in mind, proximity should be a major consideration to help them associate through formal and informal channels. Highly skilled technology workers socialize with other like-minded individuals and share knowledge and resources in an informal manner. They also switch to new companies and carry that knowledge with them. Great minds working in the same are seem to have an additive process to get their creative juices flowing.


Hu, T. ,  Lin, C. and Chang, S. (2005). Role of Interaction between Technological Communities and Industrial Clustering in Innovative Activity: The Case of Hsinchu District, Taiwan. Urban Studies, 42, (7), 1139–1160.


Monday, February 6, 2017

The Proximity of Businesses Influence its Innovative Potential

What advantages does close proximity of businesses have for product and firm development? According to a study conducted on the Hsinchu District in Taiwan, close proximity results in knowledge spin-offs as a result of people moving and sharing of knowledge between firms. Proximity influences innovative development in technology firms in a way that creates synergy and higher growth (Hu, Linand Chang, 2005). Proximity also increase the likelihood that products will move from the conception to production stages.

Innovation is a messy process where knowledge interacts with available resources in a way that leads to new product development. A significant portion of this growth rests on a person's social networks and the ideas those networks generate. Social learning becomes part of the process of how tightly woven clusters develop to overcome market challenges. 

"the close spatial clustering of technology firms favour repeated knowledge agent spinoffs and high-tech personnel mobility that then clearly influence the innovative activity of technology-based firms (Hu, Linand Chang, 2005)." 

As skilled people move from one company to the next they carry with them product development lessons in a additive manner. They can apply this knowledge to their new jobs in ways that connect corporate intellectual capital. Within their networks companies share information and build off of ideas through social construction that results in developmental synergy. 

While some industry knowledge seeps across international borders the highest states of development occurred with the confines of local clusters. Proximity in this case was an important catalyst to growth. A business that wants to succeed in a particular industry should consider the merits of working next to other businesses to soak in their innovative development.

As an added bonus, clusters made the movement from product conception to mass production more likely. It was a function of how closely they interacted to increase likelihood. When inventors and builders interact together at social clubs, restaurants, bars, and sports lounges things start to happen. Walking across the street and handing an engineer a set of plans can make a big difference. 

The study helps us understand that proximity and social interaction in places like the Hsinchu District of Taiwan produce opportunities for innovative synergy that results in new product development. When clusters are designed with innovative growth in mind, proximity should be a major consideration to help them associate through formal and informal channels. Highly skilled technology workers socialize with other like-minded individuals and share knowledge and resources in an informal manner. They also switch to new companies and carry that knowledge with them. Great minds working in the same are seem to have an additive process to get their creative juices flowing.

Hu, T. ,  Lin, C. and Chang, S. (2005). Role of Interaction between Technological Communities and Industrial Clustering in Innovative Activity: The Case of Hsinchu District, Taiwan. Urban Studies, 42, (7), 1139–1160.

Wednesday, February 1, 2017

National Innovation and Information Diffusion


National innovation is an all growth proposition that seeks to make maximum market gains by exporting relevant products to excited customers. Charging forward with a barrage of new products and services creates a zeitgeist of growth that is not easy to match. The researchers Change and Cui (2013) analyzed the factors that help encourage higher levels of international competition that led to GNP growth and development. 

Countries rely on informal and formal innovation networks to turn good ideas into marketable growth. National innovation systems refer to the innovative network within a country whereby departments and agencies promote innovation through the economic, scientific, and technological organizations (Zheng, 2006). Each of these organizations uses the knowledge of other sectors to enhance their own positions. 

Often countries use more of a closed innovation system. Each company works within a silo and doesn’t share information. Even though great ideas do come forward it is often much slower than what would be realized through higher levels of mutual development. Those countries that can generate more ideas, better products, and lower lead times can dominate the market. 

National innovation can be improved by applying scientific and technical knowledge to the development processing and exportation of products (Wang and Zhang, 2002). As universities develop new methods and people with practical experience apply that knowledge in new ways product enhancement is realized. The transference and application of information is an important criterion in the creative process.

Even though in a knowledge economy the markets transfer information across borders economic hubs should be draws for such information.  Let us assume that a new process for product development is used in one country. It will not take long before that process is copied by others as its benefits become apparent to competitors. Global hubs should be drawing in this knowledge to enhance their local hubs and operations. 

The authors found that technology transfer and diffusion are important elements in growth.  All hubs must draw in, generate and then diffuse information for the greatest possible growth. This occur most often when international trade, foreign investment, and cross border R&D processes are developed. Each hub brings in resources and information and then uses this information to enhance their competitive position.   

Chang, Y. & Cui, X. (2013). The Interactive Relationship of Transnational Technology Transfer & Diffusion and National Innovation Capability. International Journal of Business and Management, 8 (21).

Wang, Z. & Zhang, W. (2002). Foreign direct investment, technology licensing and technology innovation. Economic Research, 3, 69–75.

Zheng, X. (2006). Research Review on National Innovation System. Scientific Management Research, 24(4), 1–5.