High technology firm performance, innovation, and networks : an empirical analysis of firms in Scottish high technology clusters

Abstract

This thesis is an empirical analysis of the performance, innovation and networks of high technology firms. It is conducted at the micro-economic level, based on new empirical evidence by fieldwork methods, from the primary source data on firms in the five Scottish hi-tech clusters. The questionnaire design is cross-sectional, to which was added a time series element, and involves many unique features. It enabled the gathering of rich quantitative and qualitative data on all stages of the dynamic innovation process. The database was used in cross-sectional analysis of many key hypotheses in the hi-tech context, by robust econometric models of export, innovation (e.g. Schumpeterian hypothesis), and growth (e.g. Gibrat’s Law of Proportionate Effect) performances. The hi- tech firm’s networks, internationalisation and embeddeddness, are analysed using novel measures. A structural simultaneous equations model is developed to explain the relationship between networks, innovation and performance, by establishing a link between the innovation input, the innovation output, and performance, based on the empirical knowledge production function model. The 2-stage, 4 equations model, (using Heckman’s procedure) deals with both simultaneity and sample selection bias. Robust estimation techniques (I3SLS, Tobit) are used for estimation. The results highlight the simultaneity and selectivity issue. The hi-tech firms with aggressive innovation strategies, international markets and global products, still find it vital to be embedded in local networks, which in turn raise their performance. Technology-push factors, research networks, knowledge spillovers from markets, and a firm’s radical innovation attempts determine its innovation input intensity. Firms are unable to attain innovation success through innovation investments alone; integration of internal and external resources is important. The innovation sales intensity are not determined by innovation input, but by the demand-pull factors like customer networks, exporting, and market expansion strategies. This also applies to their export intensity. Lack of internal resources, capabilities, and government support are the major obstacles to commercialisation of innovation.