Benchmarking Regional Innovation: A Comparison of Bavaria, Northern Ireland and the Republic of Ireland

diversity and innovation. Commenting on their comparison of UK and German
engineering and chemicals firms, Mason and Wagner, for example, commented that
‘... even those firms who have no aspirations to do more than adopt innovations
developed elsewhere now increasingly require the services of highly qualified
engineers and scientists in order to identify and make use of relevant information if
they are to have any hope of staying in touch with more advanced competitors’
(Mason and Wagner, 1994, p. 68).

While the strength and co-ordination of firms’ internal resource-base may be crucial
in determining their innovation capability, external linkages or networks also play a
potentially important role (Oerlemans et al., 1998). Alongside their ability to release
resource constraints, external linkages may also help by stimulating creativity,
reducing risk, accelerating or upgrading the quality of the innovations made,
signalling the quality of firms’ innovation activities (Powell, 1998) and increasing
firms’ ability to appropriate the returns from innovation (Gemser and Wijnberg,
1995). The qualitative characteristics or ‘quality’ of firms’ external links may also be
important, however⁴.

Another important element of this evolutionary view of the innovation process - in
contrast to the more deterministic linear model - is that firms’ innovation activity is,
at least to some extent, shaped by their strategic and commercial aspirations (Roper,
1997)⁵. Firms’ innovation objectives will in turn be shaped by the attractiveness of the
markets in which firm is operating and particularly by issues of appropriability and
technological opportunity (Cohen, 1995, pp. 214-231). Demand conditions in firms’
home and export markets may, for example, also affect firms’ expected post-
innovation returns and therefore their willingness to invest in innovative activity
(Cohen, 1995, 211-214), a factor that may be particularly important in international
comparisons.

firm-level surveys have addressed the question, e. g. Shefer and Frenkel (1998), Love and Roper
(2000).

⁴ Buckley and Carter (1999), for example, consider the general issues raised in the management of
knowledge-co-ordination between firms while Stewart and Conway (1998) address similar issues in a
more specific discussion related to innovation networks.

⁵ Felder et al., (1996), for example, demonstrate the importance of firms’ innovation objectives on the
R&D and innovation investments of German manufacturing firms (see Table 5.3, p. 142-143), while
Veugelers and Cassiman (1999) highlight the importance of firms’ innovation objectives in the external
sourcing decisions of Belgian firms.

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