TOWARD A NETWORK TOPOLOGY OF ENTERPRISE TRANSFORMATION AND INNOVATION

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TOWARD A NETWORK TOPOLOGY OF ENTERPRISE
TRANSFORMATION AND INNOVATION  

• Takis Damaskopoulos
• INSEAD
• Transforming Enterprise
• US Department of Commerce
• Washington DC.
• January 28, 2003

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Central argument

• Innovation is not something happening inside
  enterprises but rather at the network interfaces
  of enterprises with the business, regulatory and
  institutional environment within which
  enterprises operate. Innovation is a function of
  complex interdependencies among highly skilled
  labor operating within and across
  knowledge-creating organizations that are
  nurtured and supported by dynamic and flexible
  institutional structures. It is the dynamic
  interdependence of this set of conditions that is
  increasingly the source of innovation.
• For ICT to be able to diffuse throughout the
  whole economy, thus enhancing productivity
  growth, business enterprises and the institutions
  and culture of society need to undergo
  substantial change. This is why the agenda of
  research on the dynamics of enterprise
  transformation and innovation, business
  competitiveness and economic growth needs to be
  expanded beyond the level of the enterprise. It
  needs to be built around the dynamic
  interrelationships between technological
  transformations, enterprises organizational
  knowledge-creating capabilities, and public
  institutions.

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1. ICT, knowledge and innovation

• 1. ICT, knowledge and innovation
• Innovation is driven by
• New knowledge
• Highly educated, motivated and autonomous labour
• Entrepreneurship
• Innovation involves three elements
• Complexity and differential temporal rhythms
• Networks
• Organizational forms

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2. Organizational dimensions of enterprise
transformation

• 2. Organizational dimensions of enterprise
  transformation the network enterprise
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• The process of innovation, especially as this
  applies to organizational and market performance,
  is increasingly becoming a function of
  open-source networks of cooperation.
• The network enterprise
• process, not task
• flat hierarchy / greater employee autonomy
• educated workforce / ongoing training
• team management / knowledge flow
• rewards / remuneration from team performance
• measurement of performance based on maximization
  of customers / suppliers contact and
  customer satisfaction
• networks of alliances to gain new knowledge

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3. Institutional dimensions of enterprise
transformation

• 3. Institutional dimensions of enterprise
  transformation clusters of innovation
• Clusters of innovation organizational, social
  and institutional matrices that underpin
  accelerated paces of technological uptake,
  organizational knowledge creation and their
  deployment for innovation. These matrices
  incorporate specific sets of relationships of
  production and management, embedded in social and
  institutional structures that support a culture
  of entrepreneurship and encourage the development
  of new business processes geared to innovation.
• The key in the competitive position of clusters
  of innovation is their ability to generate
  synergy, that is, the added value that results
  not from the cumulative economic impact of the
  critical elements present in the cluster but from
  their interaction in a way that fosters
  innovation.

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In lieu of a conclusion

• While there is abundant evidence of structural
  changes that sustain trends toward globalization
  of economic processes this does not mean that the
  comparative difference among localities is
  disappearing. On the contrary, one of the key
  issues in the growing importance of locality has
  to do with the modalities and patterns of
  learning that are implicated in the complex
  interactions between global and local processes.
  The distinctive elements that make up the social
  and economic fabric of regions their economic
  structures, patterns of social and political
  relations, cultural makeup are themselves
  critical in shaping emerging patterns of economic
  development and organizational forms. Hence a key
  determinant of a localitys economic trajectory
  is the extent to which its social institutions
  can function as frameworks enabling responses to
  the challenges of the new competitive
  environment.