Knowledge creation and innovation beyond agglomeration: The case of Hidden Champions in Germany.

Abstract

In economic geography, a main research focus is on the relationship between innovation and space. Based on the observations of spatially clustered innovative activities in urban environments, a central argument is that the exchange of innovation-relevant knowledge across firms and other actors as well as the accompanying learning processes are promoted through geographical proximity. Agglomerations are said to offer multiple advantages, e.g. through frequent face-to-face contacts and opportunities for intense collaboration, a common labour pool and shared institutions. From this perspective, a location in large urban environments is beneficial for innovation, while by contrast, being located outside of agglomerations is not (Fitjar & Rodríguez‐Pose 2019). This dissertation relates to growing debates around the unease with the seemingly accepted truths about the strong connection of agglomerations and firm innovation. The research field has been found to be urban-biased, focussed on cases of successful regions and delivering multiple explanations of their success – while neglecting innovations occurring outside of agglomerations and largely portraying such regions and their actors as disadvantaged (Shearmur 2017). Within the emergent studies of innovation in peripheral contexts, some specifics have been proposed based on empirical studies, but a coherent theoretical framework is missing (e.g. Eder 2019). Against this background, this dissertation aims to contribute to a better understanding of innovation from a peripheral perspective based on comparison of firms by location. It explores knowledge creation processes and innovation activities of Hidden Champions in Germany. These highly innovative and globally active manufacturing firms are quite evenly distributed across Germany. By exploring practices and strategies of these firms towards innovation from a comparative perspective, this study investigates the following overarching research question: • What are the characteristics and main drivers of innovation outside of agglomerations and in how far do these differ from those inside agglomerations? This research builds on relational perspectives on economic action by adopting a geographical lens (Bathelt & Glückler 2003, Yeung 2005). It focusses on actors and how they act and interact in space without privileging any spatial scale or mechanism such as local interaction. Spaces and places are not perceived as territorially bounded units but as contexts in which actors organise their often multi-scalar relations. Following these basic theoretical positions, several concepts and approaches are utilised to develop a detailed understanding of firm innovation in space. While notions of slow innovation and the reliance on firm-internal capabilities point towards reduced interaction requirements especially of firms in peripheral regions to innovate (e.g. Shearmur 2015), the proximity approach (Boschma 2005) and the notion of global pipelines (Bathelt et al. 2004) highlight that geographical proximity is not a necessary precondition for interactive knowledge creation and innovation. Based on these conceptual perspectives and linked to the goal of understanding key mechanisms of innovation from a peripheral perspective, the guiding research question is complemented by the following sub-questions: • How and where do firms gain relevant knowledge for their innovation activities? • Which role do internal capabilities as well as external efforts towards innovation play and how do firms assess both dimensions? • What is the role of the firms’ location, especially regarding local options of knowledge creation? Based on a mixed method research design including a quantitative survey among the Hidden Champions and qualitative interviews with representatives of these firms, three dimensions relevant to the understanding of knowledge creation and innovation are considered for the empirical analyses: practices of knowledge creation at the individual level, strategic approaches towards innovation at the organisational level and the socio-spatial contexts in which knowledge creation processes and innovation are organised. The overarching finding of this dissertation is that firms like Hidden Champions largely follow the same principles to innovate independently from their location. Thereby, the results highlight the commonalities of firm innovation in urban and peripheral contexts instead of pointing towards major limitations or specificities of innovation in more peripheral regions. With taking the firm at the centre of analysis, this research demonstrates that regional economic pre-conditions do not necessarily relate to the capacities of firms to innovate. Neither do investigated firms located inside agglomera-tions largely capitalise on options of local interaction, nor do firms located outside of agglomerations face major disadvantages due to the lack of local options to source knowledge and interact. Instead and irrespectively of their location, firms strategically engage in various firm-internal and -external options to gain knowledge and have the capacities to shape their multi-scalar socio-spatial contexts for knowledge creation according to their needs. The results underline that intense interaction with externals is only one out of many options for firms to gain knowledge. Next to strong internal capabilities, non-interactive modes of knowledge sourcing via desk research, for instance, and more informal modes of knowledge creation via the participation in trade fairs have been identified as integral parts of firms’ innovation activities. This study suggests that such forms of ‘selective openness’ have not been sufficiently addressed in the research field so far. Selective openness not only stresses the strategic approaches of firms towards innovation but also the variety of options for knowledge creation which are usually not reliant on or connected to the regional contexts of firms. Moreover, this study finds that the connection between innovation and agglomeration is not as clear as suggested by urban perspectives, at least for the German context. Rather, much of the urban/rural and core/periphery divide seems to be discursively produced. This dissertation complements existing research on the geographies of innovation by providing insights from a peripheral view on innovation. It contributes to current debates on urban-biased perspectives and the dichotomous representation of firm innovation in urban and peripheral contexts. Based on the empirical results, it proposes a more differentiated view on openness and suggests recommendations for place-based policies towards regional development and innovation.

Biographical Note

Lukas Vonnahme (SFB 1199 & Leibniz- Institut für Länderkunde)

Having studied Human Geography in Marburg, Lund and Frankfurt from 2008 to 2014, Vonnahme joined the Leibniz-Institute for Regional Geography Leipzig in 2014. After he worked for bwcon GmbH, a regional economic development agency in Stuttgart in 2015, Vonnahme obtained his current position as a Researcher and PhD Candidate within the project “Peripheral but Global: World Market Leaders outside of Agglomerations”, which is part of the Collaborative Research Centre (SFB) 1199: “Processes of Spatialization under the Global Condition”. His research interests include regional economic development, processes of knowledge creation in space, and innovation management.