Innovation, Competition and the Structure of Local Production Networks

Abstract

This paper reports the initial findings of an ESRC-funded study in Hertfordshire into how award-winning innovative firms organise their production arrangements. The study is a pilot project which was based on three initial operational assumptions: first, that innovation is not entirely an aspatial phenomenon; second, that modern production structures are taking new forms - variously described as post-Fordist, or flexible specialisation (flex-spec) - particularly in areas which are rich in commercial research and development (R&D) activities; and, finally, that as a consequence innovative firms in these areas commonly form production linkages with each other to create local production networks (LPNs). The research was carried out in the county of Hertfordshire just to the north of Greater London. Hertfordshire was selected because, according to a number of measures, it is one of the key areas for R&D in the UK. On the basis of our initial, limited empirical sample of firms in Hertfordshire, a key finding of the research was that a significant majority of the innovative firms sampled - both large and small - were not actually organised in LPNs in any recognisable way and that local post-Fordist production was either extremely limited in its operation or, more commonly for most firms, was non-existent - instead, these firms normally acted as local, relatively free-standing entities which were much more likely to be in competition with other local firms, than form production linkages with them.