Network (Mis)Alignment, Technology Policy and Innovation: The Tale of Two Brazilian Cities

Abstract

This article addresses network alignment through an investigation of network governance (coordination) and structure, and examines how regional level network governance and structure influence the effectiveness of technology policy to improve local firms’ innovativeness in a developing country context. It examines whether network governance and structure have a consistent influence on firms’ innovative performance in developing country regions with different levels of socio-economic development. The empirical evidence is based on case studies of the Campinas and Recife regional software networks in Brazil and the innovative performance of the participating local firms. We find that adoption of a general technology policy prescription and formation of networks to improve firm-level innovation and regional catch-up should involve careful consideration of the intended effects: membership of a network may not be a necessary condition for improved innovation at firm level.

Keywords: network alignment, network governance, Brazilian software industry, innovation networks, technology policy effectiveness, regional development

JEL Classification: O1, O29, O38, O54