Innovation-Led Entrepreneurship and Inter-Organizational Knowledge Flow: The Formation of Network Capital

Abstract

Firms utilise inter-organizational networks to manage flows and access knowledge to enhance expected economic returns. In particular, inter-organizational networks are an important aspect of the innovation process. The aim of this paper is to analyse the formation and role of inter-organizational networks in facilitating the flow of, and access to, knowledge from the perspective of innovation-led entrepreneurial firms. The paper utilises and builds upon the concept of network capital, which seeks to recognise that investments in inter-organizational network facilitating access to knowledge are a capital asset in their own right for firms. Drawing on a series of in-depth case studies of entrepreneurial firms, the paper attempts to theorise the relationship between network capital and inter-organizational network formation and innovation-led growth, particularly in the entrepreneurial context and environment. Overall, the findings suggest the importance of network capital for generating innovation-led growth among entrepreneurial firms. It is found that there are multiple mechanisms underlying the formation and development of inter-organizational networks by entrepreneurial firms, and it is through a range of complementary networks that firms are able to appropriately access and apply knowledge, and subsequently develop innovative goods and services. The findings also suggest that the formation processes of network capital for these firms possess certain particularities which are likely to be less common to be less common or pronounced among larger more established firms. From a public policy perspective, it is argued there may be a role for government intervention in educating firms in the art of network management, as well as providing entrepreneurial firms with appropriate support to establish a high performing network structure that allows them access to the knowledge they require.