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Thursday, July 2, 2015

Innovation in Economic Networks

Innovation in Economic Networks

Creating Innovation in Economic Networks

Gijs van Beeck Calkoen

"...economic networks or innovative clusters do not emerge by themselves and also will not be sustained by themselves..."

In the booklet Málaga - para invertir para vivir the Townhall of Málaga explains its vision for the years to come in four coherent areas:
  • Málaga a Seafront City
  • Picasso's Malaga, a cultural and attractive city
  • Malaga, at the forefront of the knowledge society, a hub for ideas and innovation
  • Modern Malaga, a city around its citizens and visitors
Malaga sees itself as the economic motor of Andalucia, as a city of science and innovation.

Economic Networks in Málaga

An important initiative for economic growth is Málaga Valley, in analogy of Silicon Valley. Club Malaga Valley functions as a think-tank, an initiative supported by a group of presidents of the most important ICT companies based in Spain. The Club´s goal is to design the policies and strategic guidelines to solidify Málaga as the most important technological region in Europe.

A more recent initiative is the MalagaMakers - Start-up community, a network of more than 400 creative engineers and designers, marketeers, web-professionals, entrepreneurs, investors, journalists and all sort of creative professionals. Remarkable is that their focus is global and their language is English. More information about Startups, the community and ecosystem at StartupMalaga.

However, the question rises, what are economic networks, how do they work, what are the asic assumptions and how to intervene to make them more effective?

The Theory of Economic Networks

Economic networks as a strategy for economic development and innovation originates from the conclusions of Prof. Michael Porter about the competitive advantage of nations. Many governments and industry organizations around the globe have turned to his concept of Cluster Development as a means to stimulate urban and rural economic growth. There is even a European Secretariat for Cluster Analysis.

A cluster is a geographic concentration of interconnected businesses, suppliers, and associated institutions, like educational centres and research facilities.

Silicon Valley (ICT), the Burgundy area in France (wine), Rotterdam Harbour (logistics), Hollywood (films) and the Digital Media City in Seoul are compelling examples how severe competition and cooperation in a network at the same time led to systems of continuous innovation.

For generating growth and innovations in economic networks policies may be directed on two components:
  • building a well organised and supportive economic infrastructure
  • establishing well developed social networks

A Well Organized Economic Infrastructure

A well organised economic infrastructure is a spatial concentration of firms (including specialized suppliers of equipment and services and customers) and associated non-market institutions (universities, research institutes, training institutions, standard-setting bodies, local trade associations, regulatory agencies, technology transfer agencies, business associations, relevant government agencies and departments, etc.) that cooperate to create new products and/or services in specific lines of business and at the same time are in fierce competition.

Key to the flow of technology and information among people, enterprises and institutions is the interaction between the actors who are needed in order to turn an idea into a process, product or service on the market. In order to function favourable, the economic infrastructure should be backed by adequate social networks.

Well Developed Social Networks

We can interpret an economic network as a sociobiological system, wherein people have developed patterns of behaviour that minimize transaction costs caused by social barriers resulting from geography, lack of trust, differences in language and culture, and inefficient social networks.

A well developed social infrastructure can be characterized by the intensity of Business Networking initiatives, but also by the effectiveness of the networking events themselves.

Traditional networking events contain a short presentation by an expert followed by drinks and snacks. However, there are far more efficient methods to stimulate effective interactions in groups. Examples are:

  • match making by a match maker
  • 2 minute pitches
  • speed dating
  • visualizing the network connections of the attendees
  • connect memory
  • networking from someone else
  • playing cards

Social Capital

The objective is to enhance the social capital of the participants and of the network as a whole.

An important variable for effective networking are the networking skills of the participants. There are some useful books like:

Also fairs and conferences are applied to stimulate interactions between actors in a socio-economic network. However, also these events are designed for knowledge transfer, not at all for effective networking and organising effective change. Large Group Interventions, like Open Space Technology or World Cafe can provide for self-organising potential of social networks.

Open Space Technology and "World Café"

Open Space Technology is an approach to purpose-driven leadership,including a way for hosting meetings, conferences, corporate-style retreats, symposiums, and community summit events, focused on a specific and important purpose or task — but beginning without any formal agenda, beyond the overall purpose or theme.

The "World Café" is a structured conversational process intended to facilitate open and intimate discussion, and link ideas within a larger group to access the "collective intelligence" or collective wisdom in the room. Participants move between a series of tables where they continue the discussion in response to a set of questions, which are predetermined and focused on the specific goals of each World Café.


By now it will be clear that economic networks or innovative clusters do not emerge by themselves and also will not be sustained by themselves. Both the economic infrastructure and the social networks have to be effectively designed, where co-workings, hubs and collaboration spaces play an important part. Just bringing in a diversity of business people to an event, pinning on them a name card, giving them a presentation by an excellent speaker and after that a beer is totally inadequate to exploit the full inherent potential the businesses have.

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