ABSTRACT

The innovative capacity of fi rms is considered as an essential element of the national competitiveness. Firms’ ability to handle the challenges they face determines their innovative performance. It is a dance between what is needed from a market perspective and what is possible (Stefi k and Stefi k 2004). Moreover, innovation is path dependent. As formulated by Jorde and Teece,

[I]nnovation is an incremental and cumulative activity that involves building on what went before, whether it is inside the organization or outside the organization, and whether the knowledge is proprietary or in the public domain. (1990, 75)

The ability to combine technological resources to generate new technological capabilities is considered essential for innovation processes. As Nonaka and Takeuchi concluded,

[T]he potential to innovate of a business would depend on its capacity to create new knowledge, spread it through the organization, and incorporate it in new products, services and processes. (1993)1

We have to realize, however, that the expression ‘create new knowledge’ includes not only in-house research, but also all the knowledge-seeking and knowledge-acquiring activities. Innovative fi rms interact with other organizations in an institutional setting to gain, develop and exchange various kinds of knowledge and information and other resources. The importance of accumulation and exchange of knowledge for innovation

processes supports the focus of this chapter, namely, the circulation of knowledge in innovation networks.