Table 4. The interplay between institutional capacity and openness to external forces of change in innovative networks.

Weak local capacity (Unbalanced and poorly developed institutional capacity) Strong local capacity (Balanced and well-developed institutional capacity)
Closed networks (Not open to changes as a result of external forces) Path-dependency: The network is not able to handle the forces of change locally. They follow an existing path: “This is how we have always done this – it is good enough for us”. Inertia: The network is not dealing with changes. They use their institutional capacity to avoid developing as consequence of external change forces (“backwardness”).
Open networks (Open to changes as a result of external forces) Fragmentation: There is no local milieu for dealing with external pressure collectively. The technology prone will adapt to the changes while the general community falls behind. Modelling: The network is innovative and has capacity. Local modelling of external. Have and know how to utilise the local institutional capacity to deal with external pressure and to model changes to the local needs. Has the ability to model the response in order to fulfil the needs of the network and members, and to lift the whole group.

Table 4 tells us something about the characteristics of such networks and whether they are innovative. The table shows two dimensions. The first is whether a network is closed or open to change from external forces. The second is about the local capacity to handle change, the interplay between the resources in the network (knowledge and relations), and the ability to mobilize these resources to create a team capable of of handling the challenge faced by the business or network.

Some networks are close to external impulses and will see a path-dependent development. They say “this has nothing to do with us” when they encounter forces of change, or “this is how we have always done this – it is good enough for us.” They will keep doing what they have done, and resist change. These are not innovative networks. Such networks have made their own “path” and keep to that. They either cannot or do not want to leave this path and have thus become “path-dependent.”

Other networks are open and welcome change. However, due to weaknesses in their institutional capacity, they do not act jointly, so the development will be fragmented. Some will take on change and do something about it, but they do not manage to pull the network into this. The businesses that see opportunities may be especially innovative businesses, and if they do not get the rest of the network to follow, there may be a gap between those who see opportunities and those who do not. This is a sign of weakness in the capacity to handle change and mobilize to joint action. In many cases, however, someone needs to go first and show the way so that others may follow later.

To fit into the description of an innovative network, the network has to be able to take charge and see new opportunities in external forces of change and adapt these to the local reality and act jointly. In this way the external pressure to change is turned into something positive for the network and possibly also others outside the network.

It is important to add that external forces of change are not necessarily negative but may be seen as an opportunity for desired local development. It is also important to add that institutional capacity is a dynamic characteristic, and even if someone falls into such category today, this may change in the future by working on “building” institutional capacity through a joint project and joint action. Starting small is fine, but keeping an open mind will allow for learning as much from failed actions as from successes.

In Italy, the Segno Artigiano (local craftsmen/artisians) network is an example of good practice in building institutional capacity through a change from fragmentation to modelling a common future. The main idea has been to have a strong focus on branding. From the P-IRIS project description:

Segno Artigiano was born from a call for tender notice about innovation paths for the artistic crafts of Valle Camonica. The strong administrative and cultural fragmentation that characterizes the area manifested as one of the main threats for this initiative. Indeed, fragmentation can create divergent goals and stimulate contrasting perspectives of action amongst local participants, with contrasting perspectives on potential “innovation paths, and the consequent increase of additional fragmentation in the region.

The desire to preserve every single cultural manifestation through dispersed and non-coherent strategies made of Valle Camonica a sort of confused puzzle of images, uses, brands and traditions.
The solution to this problem has been proposed by the winner of the call for tender notice: WHOMADE creative lab. By leaving the initial idea of starting individual paths of innovation, WHOMADE has proposed the launch of an innovative collective path between the artisans of the areas. The collective innovation path passed through the establishment of a network of local artisans, identified by a common brand that give the idea of territorial unit, local identity and was able to gain legitimacy.

In figure 6 we have plotted our assessment of the ability to handle forces of change for all the four networks studied in the research project VRI2.

Figure 6. The development of institutional capacity in the networks.

The actors in Energy Region are most likely in a path-dependent situation (see figure 6.A.), or alternatively in a fragmented situation, but they have discovered that something needs to be done. They want to move into a situation where they are able to create local development through the interplay with external challenges and changes. They have not yet been able to mobilize resources in a constructive way, but there is potential. We observed a lack of internal legitimacy in the network, and the network may reach further by improving internal legitimacy. There is also danger that the network’s antagonist forces will push the actors into a situation dominated by inertia.

The actors in Jostedalen (figure 6.B.) are working to coordinate among themselves, and move jointly from a situation which is path-dependent/fragmented, where each and every one developed their own product, towards a situation of mobilizing resources jointly. They have also acquired several “weak” outward ties and build new products based on new knowledge through this. In this way they are able to create local development in interaction with external challenges, so they may draw benefits from these external changes in their own development.

The Fruit and Berries Network (figure 6.C.) has the ability to mobilize internally to meet external threats like complaints of low quality, poor economy, closure of the research station Bioforsk – and model this into new ideas and innovation of production and organization. By 2013 they delivered high quality products, which means that the industry now is in good economic shape. The same goes for other network actors that depend on the regional production of fruit and berries by offering services and supplies.

IT Forum (figure 6.D.) is also able to take on external threats like poor access to broadband and is able to create local development in interaction with external changes. This has given broadband access to the region on the same conditions as the rest of the country, at equal quality and almost at the same time.

These last two networks are now placed in the “ideal route”, but they need to stay attentive all the time with new actions to lift both the network and its environment.

Institutional capacity is a central element in the ability to innovate. This is something that is present in all networks and societies, but which also may be developed over time. In the examples above, we see that change happens over time, both when it comes to institutional capacity and the attitude of networks to external forces of change. A network’s objective should be high institutional capacity and an ability to observe and reflect on external forces of change in order to handle what is relevant and let go of what is irrelevant.

Forces of change – Where do they come from?

We’ve seen several examples of how external forces of change influence networks and businesses regionally – for example as a result of national action plans.

  • In the case of the Fruit and Berries Network, participation in the Arena program had a positive effect on the network and its activities, as well as on members of the network and processing businesses.
  • The broadband initiative of the IT Forum started because they wanted to position themselves better in order to receive state funding to build the broadband connection for the region.

Political and national decisions open up opportunities for action regionally and locally. Nationally, these provide the framework or rules for activities at the local level, which has released for local activity. But this may also be an obstacle to local activity.

  • For Energy Region Sogn og Fjordane, pursuing inclusion in the Arena program has been an obstacle to developing other activities. Right after establishing, this network began pursuing acceptance in the Arena program. Since this process took a lot of energy, it took focus away from establishing other activities in the network that could lead to faster establishment of cooperative basis.

We also found examples of how the regional level influences framework conditions on the national level.

  • The broadband initiative taken by IT Forum developed into an active role in relation to national decision-making. As a unifying force from the county, they were able to sway politicians and bureaucrats in Oslo through hearings and national conferences. The sub-network, which was dedicated to the broadband strategy, has been very active and dispatched many hearing recommendations which have influenced national policy and the framework for further broadband strategies. The network is active in lobbying on behalf of their region and others who are in the same situation and have had many meetings with various ministries. This activity has been visible in the national broadband strategies. They have also taken the role as counselor for the political handling and completion of broadband calls for tender in the county.

Society is no longer merely influenced by local, regional and national forces of change, but also global forces. The problems around broadband access would not have been present unless the international development of Internet technology made it possible to communicate and share knowledge by means of electronic motorways.

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