structural changes in our economy, the broadening of decision -making processes and the emergence of the network society,
-dented scale economies, built vast empires. Great fortunes were made. The government demanded that these powerful new monopolists be held accountable under antitrust law
which the old business models seemed no longer to apply. Yet, somehow, the basic laws of economics asserted themselves.
Those who mastered these laws survived in the new environment. Those who did failed not This quotation, dating from the end of the 19th century,
was used by Shapiro and Varian to introduce their book †Information Rules: A Strategic Guide to the Network Economyâ€
However, the opportunities new scientific insights offer us, and the world in which we are able to make them reality, changes so rapidly that to
Although by no means all economists agree with Shapiro and Hall, I still feel that these two authors made a salient point.
The small and medium-sized enterprises that continue to find it difficult to transform knowledge into successful products and services
The high number of promising new high-tech firms in the fields of life sciences and new
substantially increased their investment in research. While this did lead to a major growth in scientific and technological knowledge, it still failed to lead to many
known among economists and innovation scientists as the †Solow Paradox†or the †Productivity Puzzle†6. In the European context, the term generally used is the
knowledge, but weak in transforming inventions into successful products, services and solutions for societal problems 7. The solution to this problem has been the main theme
Knowledge-intensive products and services are taking on an increasingly significant role in the economy.
Over the last 20 years, exports of these products and services from the United States and Japan have increased by 500%to 600%8. And while the European union lags
R. Smits/Technological Forecasting & Social Change 69 (2002) 861†883864 behind in this respect (showing a growth of 300),
content of our economy is the observation that the weight of 1 dollar in American export
often fails to lead as a matter of course to successful products, services and solutions to problems in society.
Italy are able to lay claim to a prominent position in international competition by making well-considered use of their comparative advantages.
3. 2. Structural changes in our economic system Important sectors of our economic system are currently going through a period of
structural transition. This results in changes within one sector, shifts between sectors mergers and the emergence of completely new sectors.
services sectors are becoming blurred. Agriculture gets more and more industrialised whereas the industrial and the services sector become more and more intertwined.
In the Netherlands the traditionally knowledge-intensive agricultural sector is apparently going to rack and ruin because of the unmistakable successes of the past.
Changes that are not only better for the environment, but which also lead to an upgrading of this sector,
same time the significance of the private services sector and†to a lesser extent†the
noncommercial services sector, is increasing enormously. Science and technology-based innovations play a key role in this respect.
Dutch economy, it is still responsible for 25%of our economic growth 16. The enormous changes and issues this trend can bring about can be illustrated by the emergence of
important role of †Cultural Industry†in our economic system was pointed out 7. When accepting his professorship in †Cultural Industry†at the Erasmus University, Rotterdam
factors determining the societal return on investments made in the development of science and technology
and will need to start anticipating the wishes of customers with very different needs and wishes.
b) While industry and services are constantly becoming more interwoven, it must be noted that innovation processes in industry differ fundamentally from those in the
services sector 18. While our understanding of these new innovation processes is growing, it has reached not yet a level that allows a substantial contribution to be made
knowledge-intensive (business) services can play in innovation processes in (all) other sectors, plays an ever more important part
it would seem that economists are still unable to make up their minds about this
Sustainability is another major issue in today†s economy. Major questions here: are economic performance and sustainability at right angles?
more sustainable economic system? With regard to the last question, expectations are rather high, but very little empirical proof has been available until now to support these expectations
the (hard) input variables like investments in R&d and the number of scientists, but also the far more intangible throughput and output variables.
property rights, how to strike the balance between competition and cooperation, what are the implications for the †corporate culture†of the far more porous character of the
-intensive business services, in innovation processes is at stake. Is their influence growing, does their role change,
The genesis of the network society demands a new role for government and other players involved in innovation processes.
innovation demand new concepts. As a result, the innovation policies of most OECD governments shifted over the last two decades from supply-oriented (production of
able to do for the economy and the society of the future As a follow-up to the above, there is the demand for management of the knowledge
infrastructure. The increasing trend for universities being expected to account for themselves is only one manifestation of an expansive phenomenon that is emerging in the international
The emergence of knowledge-intensive services (engineering firms, software houses, knowledge-intensive consultants) plays an important role in this
Recent research shows that these services play a crucial role in innovation processes both in industry and in the service sector 18.
Universities, because the demand for more specific orientation towards the problem in question calls for a multidisciplinary approach,
some success they are clipped around the ears and accused of †unfair†competition. The observation made by Hendrik Snijders in his dissertation †The One-dimensional Scienceâ€
life sciences and in the services sector and research conducted at the sectoral level into the
level (agriculture, ICT, services sector) must also be mentioned here Together, these case studies could serve as the basis for the development of various types
account the characteristics of the selection environment in innovation processes. In other words, the generation of variations is driven partly by the producers†expectations as to the
a competition between mutually relatively independent organisations and/or technologies The approach taken by Arthur 50 in his †Competing Technologies†clearly illustrates this
Collaboration and competition within and among networks, as well as the question of what the consequences are for the strategies of
Disciplines such as economics, public policy analysis and business administration are confronted with a lack of insight into the dynamics of innovation processes and systems
primarily to the strength of the system components (politics, economy, science and technology, culture) but rather
recently†being coupled to rising inflation and unemployment, gives rise to some economists assuming that structural changes in
which knowledge plays an important role are under way in our economy. Not only as a production factor, but also as a
product and a service. One notable feature of knowledge is that knowledge is easier to
even today is the main variable in mainstream economics. The fact that the products of
of established economists, these stories are dismissed generally as †old ideas parading as new onesâ€,
economists on this subject is apparently†as we read every day in the newspapers†still in the early stages 1, 51†54
economy in their models 58,59 Achieving substantial progress in terms of our understanding of innovation processes in
into the potential of new technologies for the economy and society, the appreciation thereof by several different parties, the consequences that result from realising these
focus on the articulation of the demand for new technology are useful in this context 49 Technology assessment and foresight in particular have undergone a radical evolution over
high demands on the management of the interface between organisations and the networks within which they operate,
the development of rules (and legislation) regarding competition and collaboration in networks, resulting in the public knowledge infrastructure becoming effectively integrated
overview of the opportunities these instruments offer, as well as of the associated problems In his dissertation, yet to be published,
while such instruments do offer potentially major opportunities, a deeper study into their functionality and the conditions for their use is called for
Structural changes in the economy within sectors (agriculture between sectors (from agriculture to industry to services
new sectors (cultural industry Thread: growing knowledge intensity Changes in the †strategy and management paradigmâ€
6 OECD, Technology and the economy. The key relationships, Report of the Technology and Economy
Programme, OECD, Paris, 1992 7 European commission, Growth, Competitive Strength, Employment. Towards the 21st Century: Ways and
I. Miles, Services in innovation: Knowledge intensive business services as co-producers of innovation, SI4S synthesis paper no. 3, Published by STEP, Oslo, 1998
19 F. Gallouj, O. Weinstein, Innovation in services, Res. Policy 20 (1997) 499†514 20 R. Coombs,
I. Miles, Innovation, measurement and services: The new problematique, in: J. Metcalfe, I. Miles Eds.),
), Innovations Systems in the Services Economy: Measurement and Case study Analysis, Kluwer Academic Publishing, Norwell, MA, 1999, pp. 85†103
45 G. Dosi, C. Freeman, R. Nelson, G. Silverberg, L. Soete, Technical Change and Economic theory, Pinter
52 K. Kelly, New Rules for the New Economy, Viking Books US/Forth Estate, UK, 1998
64 Netherlands Ministry of Economic Affairs, Industrie-en dienstenbeleid (Industrial and Services Policy Letter to the Lower House 26 628, session 1998†1999, Staatsuitgeverij, The hague, 1999
This paper is based on his inaugural address and on the presentation †Impacts from Trends in Economy and
Structural changes in our economic system Questions and challenges Broadening of decision-making processes and the network society
) The technological environment within which firms operate has been transformed. Technol -ogy has become so complex that it cannot be handled
new services and by fostering technology transfer •The success of networks in the Silicon valley has
who establish weak ties with their environment may not favourably react to public policies which emphasis
have to support durable investment, competition is transformed into a bilateral transaction. In such a
situation, vertical integration is adapted best to avoid F. Bougrain, B. Haudeville/Research Policy 31 (2002) 735†747 737
as a cost but as an investment (Everaere, 1993 Agents rely on this process to learn about their
Therefore, firms need to achieve economies through specialisation (Demsetz, 1991. This may explains why firms usually prefer to concentrate
may be essential that human capital in an effective team configu -ration accompany the transfer†(Teece, 1980, p. 228
this scheme, investment costs are dissociated from receipts (Amendola and Gaffard, 1994. Thus, it takes time to recover the initial investment.
Collab -orative relationships will release the financial con -straints by helping the firm to share the sunk costs
3. SMES and external communication SMES tend to be less innovative than large compa -nies and to dedicate less resources to the acquisition of
environment to suppliers and clients. The manage -ment style is centralised •The second kind of entrepreneurial managers en
opportunity. To enhance the performance and the growth of their company, they forge external tech
•Information is the nerve of competition which sets up among firms. Nevertheless, the complexity of
-ness enterprises of the Centre region (around the Loire Valley 4. Impact of cooperative relationships
the enterprises were classified into eight categories depending on their size and their ownership status (Appendix A). These firms
its institutional environment 4. 1. 1. The sector of production of the innovation The innovative projects were classified according
The success rate of small and medium enterprises which obtained external knowledge from other com
Very small enterprises 1†9 employees â'0. 9152â (â'1. 938) â'1. 2468â â (â'2. 536) â'1. 1226â â (â'2. 936
Very small enterprises 10†19 employees 0. 240 (0. 487) 0. 216 (0. 415) â€
Enterprise †â'0. 5025 (â'1. 629) â'0. 4138 (â'1. 392 Technical centre †0. 3034 (0. 936) â€
only for very small enterprises (less than 10 employees. For extensive results on the relation between firm size and innovation
projects between customers and suppliers do not always lead to payment in full. This is the case
heavily depends on investment made during previous periods. These initial investments allow them to make better technological choices and to exploit new oppor
-tunities better. If a firm temporarily neglects to invest in a technical field, it will be less aware of techno
-logical opportunities (Cohen and Levinthal, 1990. So it will increase its initial weakness. To maintain their
and the external environment and on horizontal com -munication among departments. Overlapping knowl -edge across individuals is crucial to ameliorate internal
The enterprises were classified into eight categories depending on their size and their ownership status. Our classification is more detailed than the recommenda
The other categories concern large enterprises and subsidiaries. We distinguish regional groups with more than 500 employees whose headquarters is located in
The Economics of Hope. Pinter Publishers London Fusfeld, H. I.,1986. The Technical Enterprise. Ballinger Publishing
Cambridge, MA Gibbons, M.,Johnston, R.,1974. The roles of science in technological innovation. Research Policy 3, 221†242
Economics 1, 215†222 Kleinknecht, A.,Reijnen, J. O. N.,1992. Why do firms cooperate
Economies et Sociã tã s 27 (5), 153†195 Lhuillery, S.,Templã, P.,1995. L†impact du C i. R. sur l†innovation
Technical Change and Economic theory. Pinter Publishers, London, pp. 349†369 Lundvall, B-A.,1993. Explaining inter-firm co-operation and
the Communication at CAESAR€ s Workshops. Paris Mowery, D c.,1983. The relationship between intrafirm and contractual forms of industrial research in American
Change and Economic theory. Pinter Publishers, London pp. 370†398 Perrin, J.-C.,1991. Analyse et à valuation des processus de
Economics of Innovation and New Technology 8, 79†103 Roper, S.,1998. Under-reporting of R&d in small firms:
Small Business Economics 12, 131†135 Rosenfeld, S. A.,1996. Does co-operation enhance competitive
Economies et Sociã tã s 29 (9), 99†118 SESSI, 1996. L†innovation technologique dans l†industrie.
Economies of scope and the scope of the enterprise. Journal of Economic Behaviour and Organisation 1
223†247 Tether, B. S.,Smith, I. J.,Thwaites, A t.,1997. Smaller enterprises and innovation in the UK:
the SPRU innovations database revisited. Research Policy 26 (3), 19†32 Von Hippel, E.,1987.
Transaction cost economics. In Schmalensee, R.,Willig, R. Eds. Handbook of Industrial Organisation. North Holland, Amsterdam, pp. 135†182
SMES and external communication The crucial role of the manager during the innovation process The role of networks in SMES competitiveness
International Journal of Economics and Management Engineering (IJEME) Oct. 2013, Vol. 3 Iss. 5, PP. 176-181
increased innovation in small-to-medium-sized enterprises. Hypotheses are tested using samples from Australia and USA
Increasingly, innovation in new products/services and the implementation of key processes are becoming vital
developing innovative products and services are positioned to compete more successfully (Hodgetts, Luthans & Slocum 1999).
increased innovation in small-to-medium-sized enterprises. This point was emphasized further by the governor of Nebraska
State of Entrepreneurship Conference, February 9, 2012 II. LITERATURE REVIEW A. SMES Interest in SMES is concerned primarily with their role in stimulating economic growth 3. However,
SMES face common problems that restrict their performance and by nature, generally have limited resources (Timmons, 1997).
the area of business failure is debated, research suggests that failure rates are generally high (Watson, 2003).
Entrepreneurship is considered a major driver of competitiveness as new companies in the form of small, young firms
New innovations can improve quality of life through beneficial or improved products and services B. Innovation In search of innovation, large firms are increasingly outsourcing a wide range of business activities,
opportunities for SMES. Larger firms rely on smaller firms for new ideas and technologies, may acquire small companies with
International Journal of Economics and Management Engineering (IJEME) Oct. 2013, Vol. 3 Iss. 5, PP. 176-181
globalization and increased competition (Rahman & Ramos, 2010. Alternatively, †closed innovation†refers to the processes
Innovation has been studied in several forms in the entrepreneurship literature. For example, a firm†s †Entrepreneurial
services, adopting new operating practices, technological, organizational or market-oriented, or creating new skills and
interpretation of firm innovation, the framework for our hypothesis development is based on new product/services, opportunity
opportunities for growth, and this can be exploited in an innovative fashion (Sexton & Bowman, 1991;
Growth intentions and innovation have been linked in previous studies as firms look to take advantage of opportunities renew processes,
and introduce new products or services (Schumpeter, 1942; Hamel 2000; Kiam & Mauborgne, 2005; Langerek & Hultink, 2006.
International Journal of Economics and Management Engineering (IJEME) Oct. 2013, Vol. 3 Iss. 5, PP. 176-181
Currently the SBA defines a business concern as one that is organized for profit, has a place of business in the US,
or makes a significant contribution to the US economy through payment of taxes or use of American
Early research has examined the important role of innovation within entrepreneurship (Schumpeter, 1947. Therefore, in order to measure innovation,
questions, 3) whether the company can acquire knowledge about new products/services, and 4) whether the company can
In addition, existing unique products/services in the company†s portfolio are investigated. In order for innovation to occur
and exhibit opportunity recognition and exploitation skills and thus three items that measured the willingness of firms to take on new opportunities
and also their willingness to adjust their business as necessary in order to exploit them. The proactive nature of firms to utilize opportunities was measured by action and decision-making
shown in uncertain situations Innovation throughout an organization was tested with regard to general business practices, such as whether firms search
which the venture operates be taken into consideration when measuring performance (Sandberg & Hofer, 1987. Therefore, subjective performance measures were
International Journal of Economics and Management Engineering (IJEME) Oct. 2013, Vol. 3 Iss. 5, PP. 176-181
through creating new markets and opportunities and increasing consumer willingness to pay more for added product benefits
products/services IV. RESULTS The firms†characteristics are shown in Tables 1, 2 and 3. Retail is represented best in both samples (32.3 percent for the
Other Services 14 1 0. 5 7 3. 1 Total 201 100 229 100 TABLE 2 FIRM CHARACTERISTICS †SIZE (NUMBER OF EMPLOYEES
International Journal of Economics and Management Engineering (IJEME) Oct. 2013, Vol. 3 Iss. 5, PP. 176-181
owners/managers, SME employees and the economies in which the SME operates. High levels of innovation can facilitate firm
growth and subsequent profit performance, which in turn can yield employment gains and contribute to the general economic
Due to the lack of resources usually common within the small firm environment, a stronger understanding of the factors contributing to their innovative performance is beneficial 1
by its nature be altered quickly by either internal or external events in the firm environment
) Busenitz & Lau (1996) described how national culture influences a tendency towards new venture creation 4
The SME sector is an important contributor to both the US and global economies. SME activity makes a significant
Innovation in small firms is essential for the continued dynamism of modern economies (Klapper, Laeven & Rajan, 2007
Economies of most nations are composed largely of small-and medium-sized enterprises (SMES) and their ability to
innovate has been viewed as a critical element in economic growth and renewal (Wolff & Pett, 2006; Verhees & Meulenberg
International Journal of Economics and Management Engineering (IJEME) Oct. 2013, Vol. 3 Iss. 5, PP. 176-181
Global Entrepreneurship Monitor: Report on High-Expectationentrepreneurship, London Business School/Mazars/Babson 3 Bhide A. 2000.
A cross-cultural cognitive model of new venture creation. Entrepreneurship: Theory and Practice 20 (4), 25-39
5 Covin, J, . & Slevin, D. 1989). Strategic management of small firms in hostile and benign environments.
Strategic Management Journal 10 (1), 75-87 6 Gundry, L. K, . & Welsch, H p. 2001).
High growth strategies of women-owned enterprises. Journal of Business Venturing, 16,453-470 7 Hofstede, G. 1980a.
Entrepreneurship: Theory and Practice, May, 507-528 11 Wiklund, J, . & Shepherd, D. 2005). Entrepreneurial orientation and small business performance:
CHAIRPERSON ENTERPRISE AND PRODUCTIVE INVESTMENT SUBCOMMITTEE FACT Over 90%of all businesses in Ireland are
in the SME sector FACT Last Year of the total Business Expenditure on research and
Enterprise Ireland ï Time ï Knowledge of Available Resources ï Availability of Finance ï Lack of Broadband Penetration in the Regions
R&d and Innovation opportunities •Review the issue of local authority rates and charges •Knowledge bases and Innovation Roadshow be
environment, venture capital and business development support. The research recommendation is to include the notion of absorptive capacity in studies of innovation systems
The sector comprises Small and Medium-scale Enterprises (SME€ s), creating thousands of jobs, especially among low educated.
processes based on their deep knowledge of market demand. It was expected therefore that interactions with global buyers would lead to higher innovation levels.
This paper therefore poses that absorptive capacity demands more attention in both innovation policy and research.
accessories in emerging economies. Section 3 offers a background to the (evolution of the) sector
In increasingly demand-driven markets, incremental innovations enable firms to enter market niches at relatively low cost.
business, economics and innovation systems. The first focuses on innovation processes within firms, the second studies the role played by innovation in social and economic change, whereas
market demands in interaction with researchers, buyers, business associations, business development services, finance institutes, firms, friends and family.
They also search for knowledge on internet and in articles, periodicals and books. These interactions and searches may
services), delivery to final customers, and final disposal after use (Kaplinsky and Morris 2000). All
The opportunities of firms to innovate however depend on the strategies of global buyers and mode of governance of
This offers limited opportunities to innovate, as buyers and suppliers transact but do not interact.
also provide limited opportunity to innovate, as powerful global buyers control brands, designs marketing and/or market relations.
This severely limits opportunities of suppliers to innovate. As suppliers don†t conduct allactivities themselves, it is expensive and risky for them to switch
chains, a third mode, provide more opportunity to innovate, as suppliers conduct more activities themselves, have more buyers
buyers may still limit opportunities of suppliers to innovate, because a large number of suppliers depend on a small number of buyers.
more opportunity to innovate. Modular suppliers are specialized in components of final products modules), which they sell to more buyers.
global value chains, opportunities to realize innovations depend on the mode of governance and strategies of global buyers
However, many clusters in emerging economies are poverty-driven, with limited innovation potential (Knorringa and Meyer-Stamer 1998.
comprises the business environment, education systems and the regional ability to attract and retain high educated people.
communication and training. Both are easier when the knowledge gap within the sector is small
willingness to invest, access to finance, management capability and business plans. The last step is to exploit the transformed knowledge and routines.
Absorptive capacity is determined by entrepreneurship and firm-level attributes. This is studied in business management literature.
Entrepreneurship is seen widely as the most important determinant of absorptive capacity in SME€ s (Marins 2008.
requires an investment with an uncertain outcome. Firm level attributes include firm size and organizational structures and routines, such as participation in decision making, job rotation and
interdepartmental communication and cooperation (Justin et al 2005, Reece 2007, Piralis and Reece 2009, Sternberg 2007
Innovation in home accessories in emerging economies As this study zooms in on innovation in home accessories in an emerging economy,
it is worthwhile to briefly consider its specificities First of all, it is important to realize that within home accessories innovation processes are
A second specificity is that most knowledge in emerging economies is derived still from global value chains (Mani and Romijn 2004.
A third specificity is that most local innovation systems in emerging economies are immature and
relatively weak but improving business environment, and education system reduce the ability to innovate. The question is
A fourth and last specificity is that the absorptive capacity of firms in emerging economies
systems and global value chains enable exporting firms in emerging economies to innovate and 2007, Chen et al 2011.
based on recent studies in emerging economies (Altenburg 2008, Fu et al 2011. They were adjusted after the qualitative survey
-economic stability, the education system and the business environment. As these are likely to be incomplete in emerging economies, they impact on innovation (Lundvall 2007
Case study approach The study applies an embedded single case study approach. A case study approach was selected in order to fully appreciate the influence of the context on the level of innovation (Yin 2009: 18
Bantul, which is rich in resources and skilled labor, houses about 70%of all firms. The relatively high density and closeness to the cultural city of Yogyakarta create a conduce
environment for innovative firms. As Yogyakarta is one administrative metropolitan area, it creates unity in governance issues
material has been replaced by clustering around market demand Table 1: survey sample per subsector and firm size (turn over
As respondent#1, 5 and 53 note, this has reduced global competition to a few comparable locations, especially in Thailand and the Philippines.
a skilled labor force, firms were able to produce for global markets (Ismanilda 2011. Industrial structures were embedded socially,
silver, due to demand and knowledge of the Dutch occupiers, and leather, due to exports (Isminalda 2011.
At the same time policies restricted export opportunities. These market failures reduced opportunities of small firms to innovate and export.
The Soeharto period however also laid the base for second stage, as basic education improved sharply,
The Bali bombing about halved demand from tourists but had limited a impact on exports. The earth quake destroyed stock and factories, which
demand in emerging economies, including Indonesia itself, but still the main issue for many firms
After a phase in which development opportunities were relatively open, the development path narrowed down. The crises matured the sector.
The interplay between market demands for innovation and externalities thus push the sector towards middle to high end product markets
firms that won design competitions (resp.##3, 5, 8, 14,16 of the qualitative survey) are all (very) innovative, just like
In all three cases, the product demands highly specialized production techniques and the number of sales is large
demands much brighter colors than western markets. Respondent#1 illustrates that incremental change can be creative as well:
when a new season demands new colors and designs. 27%of all firms change their product design even more regularly and a further 26
there are no large investments in capital-intensive mass production. This is not only considered risky in volatile markets,
but also not in line with the growing demand for handmade products Radical shifts in production processes are rare
as customers buy a set of products instead of just one product Most of my buyers order 25 to 100 sets.
competition. International acquisition requires capabilities such as speaking foreign languages and concrete activities such as travelling and observing.
We are not really looking into the opportunity to modernize machines. The investments would be huge
and demand is unsure. If you want to modernize, you have to specialize in one product.
We prefer to have more products. What if stone is no longer trendy? Â 'Exporters have a significantly better ability to acquire knowledge,
His awareness of western markets, business culture and communication styles create particularly strong assets in acquiring international knowledge
them an opportunity to express themselves. In the west, designers give detailed specification to their workers.
and opportunities were lost. As respondent#1 expresses: †I actually turned down an order of KLM.
It confirms that variation in absorptive capacity of firms in emerging economies explains variations in innovation levels
Determinants include entrepreneurship and firm attributes. The importance of entrepreneurship was tested in a stepwise multiple regression analysis (table 11.
Based on the regression entrepreneurship does indeed explain about 44%of the variation in absorptive capacity, whereby
only education (dummies) and the previous position (dummies) are significant indicators. As expected, higher educated have more absorptive capacity then lower educated.
market demands, quality requirements and other critical success factors of products in global markets is difficult,
provide learning opportunities and processes of constructive destruction. Firms that survive and prosper have learned and are able to
Buyers select (a) sample (s), demand further modification or move elsewhere. If they buy a product,
exhibitions, competitions and trade fairs. They potentially open up new market avenues Exporters learn most from new clients,
from global buyers that demand high standards. Selling to top level buyers such as Trade and
They know the market demand. If buyers come here they give us direction We sit and discuss the collection of 2013.
Captive value chains in home accessories do provide opportunities to innovate. Most exporters that have operated in captive chains produced for IKEA.
Standards of production, quality, environment and labor were audited. IKEA audited the firm their subcontractors, suppliers, transporters and all others involved in the value chain.
Not only the mode of governance but also strategies of buyers determine opportunities to innovate (Gereffi 2005.
Strategies of IKEA have influenced indeed opportunities. IKEA initially contributed to the innovation process, but subsequent changes in value chain strategies resulted
Transactions provide ample opportunity to learn by doing. Typically, a buyer sends a detailed product specification or design concept, after which exporters prepare sample product (s). The
competition. Therefore, your whole range of products must be interesting. I offer every natural stone from Indonesia.
a physical distance and provide less opportunity for tacit knowledge sharing Modular value chain Many firms aim to establish their brand name in Indonesia.
Design competitions play an important role in gaining brand reputation. However, to be regarded as a modular player,
New regulation demands a separate certification for each designed lamp and wooden product. As he produces small tailor-made quantities, just like other firms in Yogyakarta, this
secret is a dream in such an environment. However, joint activities of exporters †where
many design competitions. In 2011, KREO won 6 of the 15 design prices in Indonesia.
product design and community development services. APIKRI has a team of two designers and regularly invites foreign designers to work with subcontractors.
allows high educated entrepreneurs to live in the attractive living environment of Yogyakarta and remain connected to global value chains
clusters in emerging economies (see for an overview Knorringa and Meyer-Stamer 1998. But it
techniques, offers training and entrepreneurship development. The association houses an impressive amount of machines and prototype production processes developed by themselves
Though not all firms attach great importance to the government, all firms receive knowledge creating barriers of entry.
Members of the associations meet (bi) monthly, creating opportunities to share tacit knowledge. All maintain close contact with government.
sector, but all universities increasingly pay attention to entrepreneurship and community services. At ISI, students can choose between more artistic and more commercial art studies.
But their role in innovation interactions is limited to teaching. There is no joint design development or
Business Development Services (BDS. BDS focuses on SME€ s and clusters, at the exclusion of
subsiding associations and subsiding environmental-friendly investments. They also play an important role in rebuilding the sector after the earth quake.
We lose our investment in innovation, which easily adds up to 10 to 20%.%Such opportunistic behavior reduces trust and reciprocity and hence limits collective
related to product safety, environment and labor. However, Indonesia mainly follows international standards. Innovation is driven therefore primarily by international standards and
The past two decades the business environment improved considerably. Ease of doing business improved, while the sector
business environment. In the past, setting up a business in home accessories was considered not to be an option at al.
whereas affirmative action for entrepreneurship development continued. However, the ease of doing business still allows room for improvement
five years politics in Indonesia has woken up to the economic, social and cultural opportunities of home accessories, with a range of policy initiatives, projects and road maps being developed
In combination with a more attractive sector and a better business environment, it helps understanding the establishment of highly innovative firms by highly educated in sectors
economy, where variation in absorptive capacity of firms is large, it explains variation in innovation among firms.
The business environment and attractiveness of the sector for high educated improved considerably the past two decades,
attention to macroeconomic stability, business environment, city attractiveness and venture capital. Despite significant improvements in these fields, improvements are needed still.
system demands attention in order to stimulate local knowledge development and exchange. What is particularly lacking missing are research incentives and capacity development of non-firm actors
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*Business plan available *Constraint subcontractor capacity Constrain capacity staff Constraint access to finance Invest X. 353/.000.408/.000.131/.426.120/,488.124/.466
Business plan. 577/.000.629/.000 x. 304/.026.220/.183.101/.795 Constraint subcons 131/.426.269/.028.304/.026 x. 203/.042.207/.038
*Investment, borrowing and business plan significantly associate with each other and were computed into a new variable The three constraints do not associate significantly with most others
Innovation in home accessories in emerging economies 3. Research methods Research design Case study approach Sampling
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