Mending the Net: Public Strategies for the Remediation of Network Failures

Abstract

AbstractMarket and hierarchical/organizational failures have long been the target of public policies explicitly aimed to mitigate their negative effects. However, in spite of a growing interest in policies around industrial clusters and business networks, scholarship on public efforts at remediating network failures has been ad hoc and lacking a binding theory. A central question is what strategies public agencies employ to repair network failures. We begin to answer this question by distinguishing between two distinct approaches: (1) “network construction” in which government agents actively build, re-shape, or thicken the structures of private sector networks; and (2) “network activation” in which government agents seek to alter the internal dynamics of existing private sector networks. To provide empirical support for these concepts, we provide a series of short international examples to illustrate the scope of network remediation activities as well as two in-depth cases that demonstrate how these mechanisms can work: the Canadian Industrial Research Assistance Program (IRAP) and the specialized Mexican Lead Substitution Program.