Weak ties and radical innovation

The previous section argued that although strong ties facilitated the transfer of knowledge and, consequently, the development of innovations, actors embedded solely in strong-tie networks harmed their own performance, because of the self-inflicted bounded rationality of their group members. When a node’s alters are strongly connected to each other, the information one alter possesses may also be possessed by other ego’s alters, suggesting that a tie to both of them is redundant (Borgatti & Li, 2009), and that the innovations they develop are merely incremental in nature. In fact, the well-known notion of “overembeddedness” suggests that networks composed mostly of strong ties may threaten innovation, rather than enhance it (Uzzi, 1997).

The network literature suggests that in order for firms to enhance their opportunities for finding eco-innovations, not only do they need to maintain strong ties with strategic actors, but they must also create multiple weak ties with other actors in the network. Weak ties serve as bridges to different social circles and provide access to non-redundant, more novel information (Granovetter, 1973; Perry-Smith & Mannucci, 2017) (Figure 5.2).

When technological uncertainty is high and firms want to access the knowledge that their trusted, closest suppliers do not possess, firms must look for cooperation partners outside their traditional supply network. Here is where connections to weak ties can grant increased access to “outside perspectives” and novel knowledge (Burt, 1992, 2005). Because weak ties give

Representation of weak ties between nodes A and B

Figure 5.2 Representation of weak ties between nodes A and B.

firms access to non-redundant knowledge, it could be argued that they favor the development of radical innovations. Radical innovations introduce novel products to the marketplace and represent major departures from the current state of affairs in terms of product performance and technologies (Song & Di Benedetto, 2008). Radical eco-innovations for the circular economy are characterized by novel materials that allow not only the design of truly circular products, but also of novel technological solutions for circular manufacturing, commercialization, and post-processing.

Proposition 3: Firms exhibiting multiple weak ties are more likely to develop radical eco- innovations than firms embedded in a strong-tied network.

Innovation determined by spatial-linked collaboration

Industrial symbiosis (IS), one of the various concepts associated to the CE, has evolved from the study of industrial ecology and constitutes a prime element of the circular economy agenda because of its potential to turn one firm’s waste into another firm’s raw material (Ghisellini, Cialani, & Ulgiati, 2016; Lombardi & Laybourn, 2012). More specifically, IS refers to the physical exchange between two firms of materials, energy, water, and by-products, where the key is collaboration facilitated by geographic proximity (Chertow, 2000; Paquin 8c Howard-Grenville, 2012). Examples of IS include the use of non-toxic industrial waste to produce energy by incineration, or the use of excess heat and ССЬ from one firm to increase crop yields in a greenhouse.

Collaboration stands as one of the important concepts associated with industrial symbiosis. It refers to group efforts to achieve benefits beyond what the firm would normally aim to achieve in its self-interest, including network configurations for the development of eco-innovations (Zhu, Lowe, Wei, & Barnes, 2007). In other words, industrial symbiosis prompts firms to form networks for the development of eco-innovations that involve the identification of novel ways to source inputs and derive value from waste. As it is the case with typical eco-innovations, there is the perception that supplier-customer relationships in an IS context are somehow more intense than in traditional innovation scenarios, because IS partners must look for innovative resource exchanges that are beneficial for both of the parties involved.

Besides collaboration, the concept of exchanges (facilitated by geographical proximity) is also key in understanding industrial symbiosis relationships. Geographical proximity is defined as the spatial distance between actors, in absolute and relative meaning (Boschma, 2005). Geographical proximity has been regarded as a key factor in the functioning of the industrial ecosystem because of several reasons, namely: (i) the energy and transaction costs for closing resource loops are lower at a smaller spatial scale (Graedel, 1996) and (ii) the mental distance among collaborative parties is close in the face of geographical proximity. Extant literature suggests that because spatial proximity facilitates interaction by bringing people together, then knowledge exchange and innovation are more likely to take place. Conversely, when actors are spatially distant, knowledge exchange and transfer become more difficult (Boschma, 2005). Empirical studies seem to corroborate that firms located close to each other show a better innovative performance than firms located elsewhere (Audretsch & Feldman, 1996).

Spatial proximity is not only a requirement for partners in an industrial symbiosis arrangement, but also for other circular economy-related partnerships. For instance, firms in charge of sorting, dismantling, and reprocessing products might need to relocate to areas where they can be geographically close to product return flows. In sum, although we know that knowledge diffuses through social networks that are dispersed across the world, and not necessarily located within specific territorial boundaries or clusters, geographical agglomeration might be a requirement for the CE, especially for applications such as IS and reverse logistic networks.

Proposition 4: Both in industrial symbiosis and in other related circular economy applications, firms located geographically close to each other will interact and eco-innovate more than firms that are located geographically distant from each other.

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