Oct 9, 2007
Joana Mendonça and Rui Baptista of the Centre for Innovation, Technology and Policy Research at the Technical University of Lisbon, working with Paulo Conde of Solvay in Brussells, Belgium, have examined how innovation occurs within the chemical industry, by examining the processes and activities undertaken by the Portuguese branch of a multinational chemical company. They have looked at the company’s formal innovation process and from that they have gleaned a map of the knowledge bases used in the search for innovative, new products.
Europe is a major player in the global chemical industry, but recently supply has begun to shift towards the Asian and Middle East markets. Demand from these regions is increasingly rapidly but their own fast-developing industries may not face the same high production costs and strict environmental regulations that increasingly make Europe a less attractive investment.
Couple this socioeconomic and geographical shift in production with a fall off in R&D spending in Europe and the exodus of skilled labour and on the surface it appears that chemical industry innovation within Europe is on the wane. Faced with this prospect, Mendonça and colleagues suggest that it, “is of crucial importance to analyse its processes within the chemical industry.”
Their analysis of the chemical industry has allowed them to produce a map showing the spread of the industry’s widely distributed knowledge bases and to demonstrate how knowledge flows between them and how it is used. They have found that the ability to generate value-creating knowledge is concentrated in the early stages of the industry’s lifecycle regardless of region. In contrast, the Portuguese industry is mostly concentrated on activities that have already reached maturity and, in some cases, are in decline rather than looking to innovation. “Owing to this asymmetry, disembodied knowledge flows are difficult to create, and other types of relationship should be pursued,” they suggest.
They also point out that multinational companies tend to rely strongly on internal improvements and do not seek new knowledge from outside sources that might lead to profitable innovation or improvements in efficiency. Indeed, any innovative activities that take place are actually focused on preventing “unwelcome surprises and to minimise risk” as opposed to facilitating the kin of “freewheeling, imaginative, and risk-taking approach that characterises entrepreneurship”.
All is not lost, add the researchers, “large multinational companies can have a decisive role in the innovation process by providing their market expertise to entrepreneurs and the case study presented shows a path other companies may follow.”
The original research paper, “A map of the knowledge bases for the chemical industry” can be found in the current issue of the International Journal of Technology, Policy and Management (2007, 7, 245-262)