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Strong Ties, Weak Ties and the Management of Innovation: The Case of Danish and German SMEs

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New Developments in the Theory of Networks

Part of the book series: Contributions to Management Science ((MANAGEMENT SC.))

Abstract

Dynamic changes in the structure of value-added chains lead to an enhancement of innovations of SMEs (small and medium sized enterprises) and therewith to an impact of the national economies. In the European context the support of the innovation process of SMEs is a goal of the economic policy. In this context private and public consultancies should provide advice for the innovation management of SMEs. This is to some extent politically introduced but the offer of advisory service is seldom used. The integration of consultancies leads to weak relations in the cooperating innovation network and so the risk of losing the competitive edge increases. Based on a Danish–German dataset, this contribution addresses the question of which conditions initiate and impede the utilization of the consulting system from a business point of view. We found that both Danish and German SMEs utilize far more strong than weak ties when it comes to choosing cooperation partners, but at the same time the Danish SMEs manage to exploit the range of services offered by consultancies better.

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Notes

  1. 1.

    With regard to the comparative analysis of innovation management in Danish and German SMEs it is significant that both countries are characterised by small and medium-sized companies: 99.7% of the Danish and 99.5% of the German companies in the non-financial sector of the industrial economy (NACE sections C to I and K) are SMEs with less than 250 employees in 2008 (Schiemann 2008, p 3). These companies provide work for 58% of all employees in Denmark and 63% of the German employees. They generate 64.8% of value added in the industrial sector in Denmark and 53.2% of the Germany value added (OECD STI 2008). The figures show that Danish SMEs are more productive than German businesses with less than 250 employees. For 2005 Eurostat found that 100 employees in Danish SMEs generate a value added of € 59 million, while only € 45 million are generated by 100 employees in German SMEs (Schiemann 2008). Regarding strategic investments in innovations we can see that in Denmark SMEs invest 9% of the “Industry Added Value” in research and development, while German SMEs invest only an average of 3% in this field. Comparing the output of “New-to-market product innovations” Danish businesses do better with 22% successfully innovating SMEs than the German SMEs with only 8% (OECD STI 2008).

  2. 2.

    The demand regarding the initiation of networks and more transparency in the communication process ignores the dialectics of “strong” and “weak” ties: Burt rents can only be generated if information does not diffuse randomly. Therefore, brokers and mediators are highly interested in keeping up the information gradient (Gretzinger and Matiaske 2000).

  3. 3.

    The surveys were carried out within the scope of the Danish–German research project “Innovation behaviour of SMEs” of the University of Southern Denmark and the University of Flensburg, which was funded by the EU (duration 10/2002 – 03/2006). Field phases were in 2003. Surveys on the Danish side were carried out by the University, on the German side TNS Emnid was instructed to do the telephone survey (cf. in detail Dannenberg and Thaysen 2005).

  4. 4.

    The industry classification is defined by the NACE-code numbers 15–41.003, excluding publishing 22.1–22.15.0. This corresponds mainly to the sectors of food, beverages and tobacco, textiles, wood and furniture, rubber and plastic, iron and metal, electronics, as well as means of transport.

  5. 5.

    Cooperation partners could be organised according to a Guttman scale or Mokken scale and correspondingly one could choose a regression model for ordinal target variables for the analysis.

  6. 6.

    In the estimations we use multiple imputations (ICE Royston 2004; Van Buuren et al. 2006) to handle missing values. The results do not differ substantially, so we present the standard models.

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Author information

Authors and Affiliations

  1. Department of Economics and Social Sciences, Hamburg and German Institute of Economic Research (DIW), Socio-Economic Panel Study, Helmut-Schmidt-University, Berlin, Germany

    Wenzel Matiaske

Authors
  1. Susanne Gretzinger
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  2. Holger Hinz
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  3. Wenzel Matiaske
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Corresponding author

Correspondence to Wenzel Matiaske .

Editor information

Editors and Affiliations

  1. , School of Business and Economics, University of Jyväskylä, MaE, Jyväskylä, 40014, Finland

    Mika Tuunanen

  2. Fak. Sozial-u.Wirtschaftswiss., Inst. BWL / LS Organisation, Universität Wien, Brünner Str. 72, Wien, 1210, Austria

    Josef Windsperger

  3. Centre Recherche en Economic et, Management (CREM), Universite de Rennes 1, rue Jean Macé 11, Rennes CX, 35708, France

    Gérard Cliquet

  4. School of Management, Erasmus University Rotterdam, Burg. Oudlaan 50, Rotterdam, 3000 DR, Netherlands

    George Hendrikse

Appendix

Appendix

1.1 Questionnaire

  1. 1.

    With whom does your firm cooperate in the process of product development? (Strong Ties/weak Ties)

    (Multiple answers permitted)

    1. (a)

      Customers

    2. (b)

      Suppliers

    3. (c)

      Private Consultancies

    4. (d)

      Public Consultancies

    5. (e)

      External Investors

    6. (f)

      Competitors

    7. (e)

      Other

  2. 2.

    How many employees does your company have? (Size)

    1. (a)

      Less than 5

    2. (b)

      5–9 employees

    3. (c)

      10–49 employees

    4. (d)

      50–99 employees

    5. (e)

      100–199 employees

    6. (f)

      200–500 employees

    7. (g)

      More than 500 employees

  3. 3.

    Was your future partner subjected to specific test criteria before entering the cooperation? (Contract)

    1. (a)

      Yes

    2. (b)

      No

  4. 4.

    Was your cooperation partner subjected to specific test criteria during/after the process of cooperation? (Contract)

    1. (a)

      Yes

    2. (b)

      No

  5. 5.

    Is there a relationship of mutual trust? Does your partner trust you? (Trust)

    1. (a)

      Fully

    2. (b)

      Satisfactorily

    3. (c)

      Limitedly

    4. (d)

      No trust

  6. 6.

    Do you trust your partner? (Trust)

    1. (a)

      Fully

    2. (b)

      Satisfactorily

    3. (c)

      Limitedly

    4. (d)

      No trust

Novelty of innovation (Hauschild/Schlaak Index)

  1. 7.

    Regarding the least successful innovation of your company, please indicate whether each of the statements below applies, partly applies or does not apply.

    1. (a)

      The technology applied in the new product was really new for our enterprise.

    2. (b)

      The new product required us to use distribution channels we had not had much experience with before.

    3. (c)

      The behavior of the suppliers in charge of delivering the material for the new product was not predictable.

    4. (d)

      Most of the necessary production facilities were not available at our company beforehand.

    5. (e)

      There was a great need to create a new organizational subunit and/or a separate team.

    6. (f)

      Product development, launch and sales lead to a significant change in the organizational culture.

    7. (g)

      Marketing costs per piece of the new product are higher than ever before.

Analysis of Inter-correlation

 

Weak ties

Size

Hauschild–Schlaak (successful)

Hauschild–Schlaak (less successful)

Contract

Trust

Size

1.200

     

Hauschildt–Schlaak, (successful)

−0.005

0.034

    

Hauschildt–Schlaak, (less successful)

0.067

0.011

0.202

   

Contract

−0.091

−0.1351

−0.295

−0.132

  

Trust

0.015

−0.0257

−0.128

−0.006

−0.002

 

Country

−0.087

0.134

0.133

−0.180

−0.211

0.056

n = 288 n* = 257 (without the cases of no successful innovation)

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Gretzinger, S., Hinz, H., Matiaske, W. (2011). Strong Ties, Weak Ties and the Management of Innovation: The Case of Danish and German SMEs. In: Tuunanen, M., Windsperger, J., Cliquet, G., Hendrikse, G. (eds) New Developments in the Theory of Networks. Contributions to Management Science. Physica, Heidelberg. https://doi.org/10.1007/978-3-7908-2615-9_16

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