Württemberg firms in semi-conductors, computers and IT communication
technologies, biotechnology and some new materials. "The large question mark
hovering over Baden-Württemberg's future is whether the regional innovation system
put in place so carefully in the last twenty-five years is adequate to the future growth
industries of informatics, telematics, multimedia, environmental technologies,
biotechnology and financial services" (Cooke, 1997).
Data on innovation and business performance for the six regions is taken from a series
of comparable postal surveys undertaken in 1999-2000 and relating to innovation
activity over the 1996-99 (three-year) period. The original survey instrument was
developed for the Irish regions and adapted for use in the other study regions (see
Roper and Anderson, 2000). In each case the target population was manufacturing
plants with more than 20 employees with sample responses weighted to give
regionally representative results. In addition to data on their innovation activities,
plants also provided information on the use of a range of IT and organisational
techniques, barriers to innovation activity and a range of accounting measures. The
latter group of variables are particularly important in the current context as they allow
us to develop a range of indicators of business performance including measures of
productivity (value added per employee) and an indicator of plants' gross profit
margins.
Table 3 summarises some of the measures which form the focus of the empirical
analysis to follow. In terms of knowledge sourcing, R&D employees as a percentage
of the workforce was highest in South East England and Scotland and lowest in
Northern Ireland. Non-supply chain and supply-chain linkages, however, were more
common in both the Irish regions than in either the mainland UK regions or the two
German regions (Table 3). One clear possibility is that Irish plants were substituting
knowledge sourcing through collaboration for knowledge sourcing through in-house
R&D activity. In terms of innovation, the proportion of innovating plants (i.e. plants
introducing a new or improved product during the previous three years) was highest
in South East England (78 per cent) and lowest in Northern Ireland (62.8 per cent) and
Baden-Württemberg (62.0 per cent). A broadly similar pattern is also evident in
innovation success - i.e. the proportion of sales derived from innovative products -
among the UK regions. Plants in Baden-Württemberg and Bavaria, however, had
higher proportions of sales derived from innovative products than any UK regions
(Table 3).
Two measures of business performance are also reported in Table 3. Value added per
employee is a standard indicator of labour productivity and is measured in £000 pa in
1998 prices. Gross profit margin (%) is derived as total sales less the cost of
materials, labour and capital investment. As expected labour productivity was
markedly higher in the two German regions than in the UK regions, with Northern
Ireland lagging someway behind other areas. Median gross margins were perhaps less
predictable a priori but were highest in South East England and Baden-Württemberg.
Again the median gross margin in Northern Ireland was markedly below that in the
other study regions (Table 3).
4. Empirical Analysis
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