Regionalization and Innovation: Work and Organisations - Essay Example

Regionalization and Innovation: Work and Organisations Even with the advent of globalization, which has significantly altered the nature and scope of the local and global business environment, innovation and regionalization remains paramount to the success of any organization. According to Porter (1998), the endurance of competitiveness on a global scale is essentially vested in elements and factors that can be found locally and these include knowledge, relationships, motivations and others that cannot be matched by distant rivals. The core of regionalization debate is that there is no way a firm can expand its activities to international scope without first building on what they can locally access. Theoretical and practical evidences have been presented in the attempt to prove that regional embedding is either the solution or at least a part of the solution to gaining an understanding of the dynamics that characterize industrial development, as well as providing an answer to the dilemma that is ensuing as a result of a highly competitive global economy. This paper seeks to establish the underlying connections between firms’ increased capacity for innovation and their levels of regionalization, by attempting to respond to the question; to what extent do globalized firms depend on unique local resources in their overall integration? Sunnmore shipyard in Norway and the Silicon Valley in the US will be used as live cases studies to understand the importance of companies embedding themselves in a centralized area. To demonstrate this connection, one of the organizations that have been considered is Sunnmore which is one of the largest shipbuilding in Norway, it has been operational for the last 40 years and it has created over 5000 jobs within and without Norway in different capacities and sectors. The organization has been able to take over most of its business from local and international shipping firms, and has effectively managed to strategically position itself top of the shipping industry (Asheim and Isaksen, 2002). To a significant extent, the competiveness of Sunnmore industries is based on the cluster innovation; in this context, a cluster as defined by Porter as a physical concentration of firms and establishments in a given field. They typically encompass a series of connected industries and other entities required in the production of goods or services that are important to the competition. From an analytical point of view, four main systematic improvements may be identified in the cluster operation and these are local user-producer interaction, incremental shop floor innovations local knowledge spill over and finally corporation between various organizations along the manufacturing and supply chains. Shipyards are often viewed as a source of innovation since they are the place where various professionals interact and exchange ideas. In addition, in shipyards the local shipping contractors who are in charge of designing and construction of new ship play a very important role in in the mediation of the demands and specification on the product in terms of yard and equipment supplies. These yards also provide a forum where ship owners meet to discuss the challenges facing the ships that have already been made and to come up with new designs and proposals based on their practical experience. In the shipping industry, there is a notable distinction between users and consumers, while the end consumers are shipping companies, the individual users are fishermen and seamen. The shipyard provides a central location where all these users and consumers can congregated or simply meet. They then exchange crucial feedback on how the different competitors are operating and make suggestion for improvement. Incremental improvement is another way through which innovation can be seen to advance, it stems from the fact that engineers and works will gain more experience and expertise through continues practice in the field. This is likely to spur an attitude of enthusiasm and loyalty to the workforce, which encourages the employees work extra hard to come up with better ways to work enhancing productivity and making work easier. A very critical contribution to innovation is the spillover of knowledge and technology between local firms. This is because the cluster is essentially comprised of a variety of specialized firms, and the spill over occurs when the firms collaborate in a project. In this way, the employees in the different fields will work closely with each other and consult which results in exchange of ideas and expertise. The personal contact during working hours is easily transferred to informal contact outside the work environment and as a result the workers will get a chance to interact with each other and openly share ideas that may have import on their professional capacities. The fourth way in which innovation occurs is by means of cooperation through local organizations. There is a close institutional infrastructure through the connections between organizations sponsored by Sunnmore, such as the mechanical engineering association and the Marine time Nodvest. Organizations united by the existence of the cluster often benefit through vocational training, promotion of Local Corporation and common understanding. Notwithstanding that the example provided above fundamentally focuses on the increments in innovation stimulated by Local Corporation and knowledge spillover, innovations nevertheless require the use of research and development. In this case many firms have established department chiefly for purposes of R&D most of which are based in one geographical area. This is in recognition of the fact that despite the existence of a knowledge economy, innovation and creativity is best supervised and natured from a central place where all the different ideas maybe shared and brainstormed on by several experts in different field on a one on one basis. A more modernized demonstration that companies need to focus on regionalization even with while pursuing global excellence is the American tech hub Silicon Valley. Best (2001), explains that any region productivity level is only attained through the implementation and consequence diffusion of universal principles of production and organization characterizing the business enterprises. Regionalized Hubs such as Silicon Valley, Route 128 Massachusetts and even third Italy have been instrumental in raising the performance standards in product development and innovation through the principle of integration to product design. Much of this integration is only achieved since companies take advantage of the resources and presence of each other through the existence of regional hubs to boost innovation and professional growth. The firms that constitute this immense entity are united by the fact that although many of them are in competition, since they are geographically located at the same place that fosters intimate and personal networking as well as resource sharing. At a micro level, Silicon Valley is responsible for the creation of numerous disruptive and innovative technologies that people are quickly updating to and seemingly unable to live without. The valley is home to numerous innovations of business models that are designed to be less capital intensive but with extremely high potential turnovers (Lécuyer, 2006). The secret behind such innovation is the fact that there is the right combination of technical expertise, entrepreneurs and other risk tolerant individuals who can work in harmony to foster big ideas. The brightest talent in the US and in fact the world can easily be attracted there because the level of work offered therein is adds significant value to their personal and professional portfolios (Casper, 2007). It has been argued that comparatively, one of the major reasons British IT brands are lagging behind American ones despite the fact that the former produced some of the key individuals in computing such as Charles Babbage and Alan Turing is a poor sense of regionalization. American tech companies have over the last two decades taken over technology filed globally and are listed among the top 10 biggest and most influential firms such as Microsoft, Google Facebook and amazon just to mention a few. The reason behind the UK’s dismal performance in the same field is the fact that they have the various competing and complementing firms too widely spread apart for there to be any meaningful personal exchanges between the various professional working in them (Gary, 2014). Therefore, organizations need to wake up to the fact that although the internet supposedly allows one to work from anywhere, the power of clusters to foster innovation and creativity cannot be understated and this is especially evinced by the UK-US comparison. In conclusion, it is clear that regionalization provides an excellent platform for the growth of industrial and technological innovations, mainly through the interaction of human resource and shared R& D efforts. In any field, whether it is a mechanics based one such as shipbuilding or a technology cantered like those found in Silicon Valley regional interconnection has proven to be a key factor in providing a competitive advantage. Sharing of resources provides a convenient foundation for development of new skills and competencies making firms that work within or have formed clusters highly competitive in the global field. Ultimately, even with the virtually unlimited scope allowed by globalization the importance of traditional connectivity through physical networking cannot be overstated and this is best achieved when a firm or firms base their key stations in the same geographical location. References Asheim, B. T., & Isaksen, A. 2002. Regional innovation systems: the integration of local ‘sticky’and global ‘ubiquitous’ knowledge. The Journal of Technology Transfer, 27(1), 77-86. Best, M. 2001. The new competitive advantage: the renewal of American industry. Oxford : Oxford University Press. Casper, S. 2007. Creating Silicon Valley in Europe: Public policy towards new technology industries. Oxford : Oxford University Press. Gary, T.2014. The UK needs its own Silicon Valley and it should be in London. [online] Available from http://www.theguardian.com/small-business-network/2014/mar/07/uk-needs-silicon-valley-london Lécuyer, C. 2006. Making Silicon Valley: Innovation and the growth of high tech, 1930-1970. Cambridge: MIT Press. Porter, M. 1998. Clusters and the new economics of competition. Harvard Business Review, 76, no. 6: 77-90. Read More