Innovation, Networks and Plant Location: Some Evidence for Ireland

The influence of networks and locational factors on plants’ innovation activities have received considerable attention over the last decade. Most empirical work has centred on the hypotheses suggested by the urban-hierarchy model. That is, that resource-rich, urban areas may be more conducive to product innovation while more rural areas are more suited to process change. This paper differentiates between four types of area in Ireland (urban, urban-periphery, rural, second centre) and uses survey evidence to examine the impact of these different environments on plants’ innovation activity. There are three main conclusions. First, networks and technology transfer play an important part in determining the probability that plants will be innovative and, to a lesser extent, the success of that innovation. Secondly, there is no evidence of any urban-hierarchy effect in Ireland. Thirdly, larger and externally-owned businesses are more effective at translating innovation inputs into innovation outputs and are typically more successful innovators.