Knowlege networks for innovation in small Scottish software firms

Abstract

This paper examines the emergence of small indigenous software companies in Scotland, focusing on the strengths and weaknesses of the region's socio-economic infrastructure as a foundation for innovative new business ventures. Following a brief review of some of the accepted wisdom on high-tech start-ups and regional economic development the paper provides some background information on the Scottish region, comparing new firms in the software industry with the foreign multinationals that dominate the local IT industry. A framework - the ‘sociotechnical constituencies’ approach - is then proposed that allows the author to examine networks of specialist knowledge that underlie new business development. Agglomeration effects and the influence of ‘clusters’ of complementary types of knowledge, expertise and innovative competencies at the regional level are at the heart of the analysis. The framework is applied to a sample of local firms, looking at how ‘learning’ via sociotechnical networks underlies their evolution. Policy-makers' attempts to boost the region's new business birth rate and promote the hoped-for ‘silicon glen’ effect are viewed in the light of the study's findings.