This thesis 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 the innovative performance of firms located in developing country regions that show different levels of socio-economic development. The empirical evidence is based on a multiple case study of two regional software networks in Brazil – Campinas and Recife – in the period 2006 to 2009.

Studies show that regional networks and industry growth in developed countries involve some degree of co-evolution. Networks are supposed to foster firm-level innovation, since government policies tend to assume that firms learn by interacting and that new knowledge is essential for innovation. Inspired by these findings, governments in developing countries often seek to address industry and regional development by encouraging the formation of regional networks. Policies aimed at supporting development of networks have become an important instrument to support interaction among firms, and between firms and other network actors. However, the investigation of networks, and especially the formation of dyadic ties and network consistency, is rarely the subject of empirical work on developing countries’ innovation systems. Existing studies of networks tend to provide little empirical evidence on multi-organisational interaction and often do not investigate the related controlling mechanisms, which are crucial for a better understanding and more effective policies. This thesis, using a single analytical framework, provides a study of technology policy, multi-organisational network governance and structure, and firm level innovative performance.

The research examines two Brazilian software industry networks established in the early 1990s, promoted by a national government programme to support the formation of regional networks. The histories of the information and communication technology (ICT) industries in the two regions are very different. The ICT industry in Campinas benefited from long-term national support, while the ICT industry in Recife received little direct support through national policies. The history of each network (i.e. infancy and evolution) is described until 2009. National government programmes to support these networks were complemented by local and state level policies aimed at developing the respective regional software industries. We observe the innovative performance of local firms participating in these regional networks in the period 2006-2009. The finding from this doctoral research is that network governance and structure had a mixed influence on the effectiveness of government technology policy to promote firm-level innovation in the networks investigated; the thesis sets out some of the reasons for the differences in firm level innovative performance in the two networks.