regional and institutional innovation in a peripheral...

[Regional Innovation Processes and Benchlearning between Regional Innovations]

Regional and institutional innovation in a peripheral economy:

An analysis of a pioneer industrial endeavour and

benchlearning between Norway and Canada

By assistant professor Schei Torbjorn, Finnmark University College, Norway. Follumsvei 9, 9511 Alta, torbj@hifm.no, +47 78450460, mobil +47 99794302 Torbjorn Schei has a filosophie licentiateexam in economics from University of Umeå and a master in business from NHH (Norwegian School of Economics and Business Administration). In 2000 he was part of a team who initiated a pilot project on cooperation between the Finnmark University College and local industry. In 2001 he initiated and later served as a project leader for “The Sea-Cluster North”, a local networking initiative which in 2003 became part of the national ARENA program.

Abstract Comparing regional innovation processes between the Province of Prince Edwards Island in Canada and the County of Finnmark, Norway; a distinct difference is the application of a comprehensive development program in Canada and the lack of such in Norway. In a benchlearning project experienced Canadian business and public development agency leaders demonstrated that a major challenge was to create more of a common understanding among the regional stakeholders of key success factors. In order to identify relevant sets of capabilities in pioneer industrial development a two-step pattern model is proposed, and applied to a systematic analysis of the business environment and its infrastructure, encountered by industrial pioneers in Finnmark and Price Edwards Island. It is demonstrated that more attention must be given to institutional innovation and the division of parts and responsibilities among both regional partners and between the regional and the national level. Keywords Pioneer industry, less-favoured region, business environment, cluster initiative, international benchlearning, institutional thinness

Introduction The empirical challenge in regional development is to study and compare regions. For practical reasons, administrative regions are usually the subject of studies, whereas economic regions would be more appropriate. From a knowledge economy perspective one should study regional learning between actual partners. “By tracing the layers of social context of these partners, the relevant scale should then emerge. Put differently, the starting point for empirical study is not the region but the learning relations between regional actors” (Rutten and Boekema, 2007, 291). The research problems addressed in this paper are centred on identification and integration of competences in pioneer natural resource based industrial development, and the potential benefit from international benchlearning. The paper contributes to the discussion on regional innovation processes by analysing an effort to establish a new natural resource based industry in Finnmark, a less-favoured region and the northernmost county of Norway. Benefits and challenges in an international benchlearning project between the Province of Prince Edwards Island in Canada and the County of Finnmark are described. A comparison of a successful Canadian industrial endeavour with a less successful Norwegian effort indicates that a major difference in regional innovation processes is the attention and skills devoted to systematically assessing and developing

“Insightful Encounters - Regional Development and Practice–Based Learning” Conference on Regional Development and Innovation Processes March 5th-7th, 2008, Porvoo - Borgå, Finland

a business environment knowledge infrastructure. An apparent important and unsettled issue in the Norwegian case is the division of parts and responsibilities between the private and public sector, and how different sets of necessary competencies can and should be developed and configured. A pattern mapping of different, but nested sets of capabilities is proposed, and the Canadian and the Norwegian practises are compared. The discussion is then taken to the issue of environmental aspects and epistemological pluralism. Section one introduces the Seacluster North case, and the international benchlearning initiative. Background, actions and experiences over a period of 4 years from 2001 to 2005 are briefly described. In section two mixed experiences are looked at in retro perspective. The initial theoretical foundation for the Seacluster North initiative is presented and renegotiated in light of the findings. A particular challenge for pioneer industrial development is the interconnectedness of different layers of social context, each representing key-success factors, policies and action opportunities. Comparing our a priori understanding with experiences shows that attention was initially too narrow, with a focus on technology and functional triple helix relations. Theoretical elements of complexity and process are introduced, and the perspective on benchlearning shifts from a functional to an institutional perspective. A two-step pattern or Gestalt model of elements and links for analysing integration of competencies (capabilities) in a pioneer industrial endeavour is proposed. The Seacluster North case Norway is a success story in commercial salmon aquaculture, and a world leader in export. Norway has, however, not succeeded –over a period of 20 years- to establish a viable blue-mussel and sea-urchin industry. At the same time nations like Chile and Canada have ventured to build profitable industries in both species. In 2002 the Seacluster North was initiated in Finnmark as a cluster initiative to assist pioneering enterprises. The initiator was Finnmark University College. The Seacluster North initiative had its roots back to 1999, when Finnmark University College became a pioneer institution in the “The MOBI Innovation Programme - Mobilisation for R&D-related Innovation”, initiated by the Norwegian Research Council. In 2003 the Seacluster North project was accepted as a regional innovation pilot in the national ARENA-program; initiated by The Norwegian Research Council, Innovation Norway and SIVA (The Industrial Development Corporation of Norway) (www.Forskningsradet.no). At the Finnmark College it was a new bachelor in business administration emphasising regional economic development which sparked our involvement with SMB (small and medium businesses). This local, bottom-up, initiative coincided with the launching of the top-down ”Bridging program” by the Norwegian Research Council. At this time there was a wave of entrepreneurship in the realm of new species in aquaculture; blue mussels and sea urchins. Looking into the challenges faced by the entrepreneurs revealed the need for systematic knowledge development, and a regional industrial forum; Seacluster North (SCN) was founded in 2001. Exploring former efforts and practises in developing viable production systems identified international success stories not well known by neither the entrepreneurs, nor the regional or the national public development agencies. In 2002 relations with Canada were established. This international networking later served as an element in the application for SCN to be accepted as an innovation pilot in the national ARENA-program in 2003 (Schei, 2003). When establishing relations to The Province of Prince Edwards Island and their successful entrepreneurs, it became clear that Canada had implemented a regional innovation strategy1 for developing knowledgeable public institutions and support program for their entrepreneurs (National Research Council, 1999). The entrepreneur support programs had an experience and skill building philosophy in which initial financial investments were kept low. When the SCN was established in 2001 the entrepreneurs in Norway were in a totally different situation. Their first steps had been to plan –with little or no industrial experience- production facilities capable of operating at an output level characterised by scale economies. At face value

1 See Kevin Morgan and Claire Nauwelaers, Regional Innovation Strategies: The Challenge for Less-Favoured Regions (London: Routledge, 2003).

this looked attractive, and when the SCN network was initiated the entrepreneurs were about to take action on their visions and high cost investment plans. The next 5 pages are power point presentations of the Seacluster North benchlearning project as it was presented in 2004, in a national ARENA-program gathering (Schei 2004). The presentations provide a map of the geographical location, and key-words on strategy, actions and experiences. For strategy documents see Schei, 2002; 2003. Attention in this paper is limited to the blue mussel case, because it is the most transparent and well suited for an analysis of insightful encounters and benchlearning as an element in regional innovation processes.

Northernmost and best in doing

Established 2001

New species in aquaculture

• The largest potential in

Europe

• Blue-mussels

Finnmark, Troms

• Sea Urchin

Northern Norway

What is Seacluster North?

Problem solving by cooperation Better cooperation among industry, R&D and development agencies

• From single business to development teams • From single project to value chain

->Endogen growth theory ->Innovation system

The SCN strategy Fokus on industry and business profitability -> The capability based innovation system Experience based and theoretical knowledge are of equal importance -> Synthetic knowledge Shortest way to knowledge: National and international knowledge transfer -> Benchmarking

Actions; What did SCN? Documentation of Norwegian failures and international factors of success Knowledge transfer -feasibility study in our area by a Canadian successful entrepreneur -study tours from Norway to Canada -observation lessons2 Gatherings -international representatives Scenario study Discussions of business experiences

2The Norwegian term is “hospitering”

Experiences I

Observations • Introduction of international commersial

experience brings about a comprehensive approach to critical sucess factors, and gives new perspectives.

• Some reluctance in all sectors, but also interest and openness

• Considerable distance in perspective between regional R&D and international industrial advisors

Our industrial advisors comment ”What is your leading agency?”

• Is there a lack of public responsibility and leadership in business development?

”You can not build an industry by jumping?!” • Impatient and shortsighted approach

Development by a Norwegian trial and error approach is too costly!

Experiences II

Money is evaporating

Overview picture: ”Shows a good example of how to spend lots of money but have no mussels. The consequence of doing no site analysis!”, Wayne Somers, Canadian industrial advisor.

Raft: State of the art in socking blue mussels internationally. Require manual work and skill. No risk, low costs, high benefit/cost ratio. Norwegian enterprises prefer labor saving high tech-high risk.

Conclusions

• There is a considerable potential in international benchmarking in all sectors in the Triple-Helix

• None of the sectors have tradition for this kind of learning. There are structural and cultural barriers to overcome

• New industry development is also an opportunity for new technology and practises – our

experience is that international benchmarking must be seen as a complementary approach

• A facilitator must be careful in promoting perspectives that could be considered rival to established perspectives and interests

The social fabric matrix of capabilities and social learning relations

Entrepreneurship may consist of radical jumps into the dark, with a large risk of failure and a small chance of successful radical innovation. On the aggregate level of the economy such jumps are beneficial when the weight of incidental success exceeds the weight of frequent failure (Nooteboom, 2005, p. 141).

“The weight of frequent failure” in radical innovation is rooted in the nonergodic3 character of the economy and the capability of the regional innovation system. The term capability is used to depict a strategic skill in the application and integration of competences (Boisot, 1998)4. The use of international benchlearning is an option in the integration of competences. Learning relations between regions are, however, embedded in different institutional environments. The institutional environment is the set of national, regional and local institutions (history, culture, formal structures, business environment) that provide for the perception of the space of action in development and innovation in all sectors; industry, politics and R&D (Hodgson, 2006). In a learning perspective a production system is a configuration of knowledge assets. Technologies, competences and capabilities are manifestations of these knowledge assets. Following Boisot (op. cit.) the term technology is used to depict sociophysical systems configured so as to produce certain types of physical effects, e.g. the anchoring of a blue mussel rig. The term competence is used to depict the organizational and technical skills in achieving a certain level of performance in the production of physical effects, e.g. the actual anchoring of a blue mussel rig in a particular more or less exposed site. The term capability is used to depict a strategic skill in the application and integration of competences, e.g. it includes the why and where related to anchoring of a blue mussel rig. At a localised, industrial and system level of analysis capabilities are the strategic skills in the why and how to develop a new industry in blue mussel aquaculture, i.e. the performance of the national and regional innovation system (Lundvall, 1992). In our case the set of capabilities (of the regional innovation system) are related to a shift and a broadening of the regional industrial structure in the county of Finnmark from harvesting of marine resources to aqua culturing (Aarsaether, 2004). In the learning process of developing a regionally new industry technology, competences and capabilities are nested as a Chinese box5 of knowledge assets. These knowledge assets are in this paper seen as variations of competencies – spanning the information space from technological know how to industrial development strategy - which makes the successful integration of competences of decisive importance for any successful innovation. An initial challenge for the SCN network was complexity. Which were key-success factors? Strategy documents were initially developed on the basis of value chain analysis complemented by a functional network and cluster development theory (Schei, 2002). The international benchlearning initiative introduced, however, a much more comprehensive set of competences. Absorptive capacity among Norwegian actors and differences in visions and industrial cultures between Canadian and Norwegian partners became an issue. Differing perspectives and interests first came to the surface as scepticism to the validity of information provided by successful Canadian business pioneers. The sense making of their hands on experiences challenged visions, perceptions and the balance of defining power among members of the SCN network. Natural science scholars saw “their” research projects threatened, and the entrepreneurs were appalled by stories about hard, manual work and meagre profits6. Differences in values, perceptions

3In this paper used synonymous with “which does not repeat itself”, i.e. unforeseeable. A key concept in Douglass Cecil North, Understanding the Process of Economic Change (Princeton, N.J.: Princeton University Press, 2005). 4 At the level of an organization capabilities can be defined as the ability of an organization to perform a coordinated set of tasks, utilizing organizational resources, for the purpose of achieving a particular end result C. E. Helfat and M. A. Peteraf, "The Dynamic Resource-Based View: Capability Lifecycles," Strategic Management Journal 24, no. 10 (2003). 5 Refer to nested ornamental boxes; usage is frequently as a metaphor for many layers of encapsulation. 6 Lifeworlds were challenged. Jürgen Habermas, The Theory of Communicative Action (London: Heinemann, 1984).

Context

Actor and actor relations

Space of opportunities

Action capabilities

Action choices

and priorities became a recurrent and increasingly stressful dimension in the SCN activity and network relations. In a retrospective analysis it appears that the initial functional network perspective and value-chain approach was far too simplistic. See Uhlin (2005) for a discussion of the failure of instrumental thinking. In 2003 the first enterprise gave up, and in the years to come “the weight of frequent failure” was felt throughout the network. In spite of some entrepreneurs going out of business due to financial and mental exhaustion, high quality mussels were produced and ready for the marked by 2005. But, the marked was not there. A basic assumption had failed. In 2007 the market had improved, but toxic algae now made harvesting impossible. Could this have been foreseen? If yes, how and by whom, i.e. what kind of capabilities and institutions would have been required? Local development networks as capability builders In a comparative analysis of industrial development networks in 8 municipalities in Norway Bukve (2001) combined various theoretical perspectives with grounded theory in an analysis of basic categories and links (figure 1).

Local industrial development

Fig. 1. A generic context, relation, process, capability model (Bukve, 2001) At time T0 context can be seen as an exogenously given business environment. At the same time actor and actor relations represent an opportunity for action, and an endogenous perspective on regional development can be taken7. A process perspective is included in the model by a time span from T0 to T1. At T1 the space of opportunities and action capabilities provide for observable industrial development. International benchlearning can be seen as a choice of action between T0 and T1, which can be expected to affect both the space of opportunities and action capabilities. In the SCN case the choice of international benchmarking as a strategic choice of action gave this small, pioneer network a position among larger and more established industrial networks competing for being

7 See Patsy Healey, Collaborative Planning: Shaping Places in Fragmented Societies (Basingstoke: Palgrave Macmillan, 2006), for a discussion of exogenous versus endogenous perspectives in regional development theory.

admitted into the national ARENA program. By being let into the program the SCN got access to financial, intellectual and network resources which in many ways increased the space of opportunities. In addition, both the formation of a development network in 2001 and the formal acceptance into a national development program added to and changed actor relationships. However, it soon became evident that new relational resources challenged individual perspectives on roles and responsibilities. Industrial actor and actor relations were at T0 given by only a handful of pioneer enterprises with no prior experience with blue mussel production, some even without any commercial experience. Some were serial entrepreneurs, considering blue mussel production an interesting complement to well established salmon farming, traditional fishing or small scale trading activity. New opportunities and more information made the entrepreneurial project more complicated and diverse in relation to both perceptions and action capability. Developing and maintaining network relations added transaction costs not foreseen, and required relational competences that were unfamiliar and challenging. There was some initial worry about language differences, but this gradually faded as a perceived obstacle for learning relations. Instead deeper issues of perception, values and vision came to the surface. One schism was differences in opinion about the relative importance of elements in business infrastructure development, and the division of parts and responsibilities among the network partners (within the space of opportunities and action capabilities). The space of action capabilities One approach to mapping key-success factors in developing the business environment is the cluster initiative Funnel and CIPM8-model by Sölvell, Lindqvist et al. (2003). The Funnel perspective is, however, as most of the literature on clusters and networks, designed for analysis of performance in an existing industry. Typical for most innovation efforts in peripheral economies is a lack of clusters and cluster dynamics (Morgan and Nauwelaers, 2003, Isaksen, 2003). In this situation regional innovation policy has been more oriented towards fostering entrepreneurship and providing support for entrepreneurial processes and individual enterprises. This is an actor oriented approach, which in a system perspective can be seen as necessary but insufficient. An “enlarged Funnel model” which illustrates the interaction of different analytic layers of business environment, including entrepreneurial processes, is illustrated in figure 2. The firm is in the centre. At the same time the firm is embedded in institutions. And, there is a recursive connection among the layers of social context.

8 Cluster Initiative Performance Model

Fig. 2. The business environment seen as a configuration of interacting levels connecting a bottom up and a top-down perspective The foundation of the model –seen as a vertical set of interacting levels - is a localised socio-economic environment, categorized as natural resources, culture, institutions and technologies (Ruttan, 2006). At this bottom-up point of departure industrial history, conventions and path dependencies can be catered for. E.g. Lindkvist and Sanchez (2008) discuss localised conventions in relation to industrial success and industrial innovation patterns between Norway and Spain. An alternative point of departure in analysing industrial and regional development is to search for competitive conditions brought about by institutional changes at a global level, driven by technology, trade conditions and demographics (Cho and Hwy-Chang, 2000). In the SCN case it was information about international markets that spurred the industrial endeavour in the first place. Statistics on prices, expected international supply shortage and market development were basic assumptions, in combination with promising production sites in Finnmark. The SCN was initiated in a top-down and bottom-up encounter, between the national and the regional level. The policy that brought these levels together was the implementation of endogenous growth theory illustrated by Triple-Helix and Mode 2 concepts9. The SCN was thus founded and facilitated in a network

9See Ernø-Kjølhede: In “The New Production of Knowledge” by Gibbons et al., (1994), a key observation is that we are currently witnessing significant changes in the way research is being carried out –changes which can be characterised as a disintegration of traditional disciplinary and institutional borders of

Global National Regional Cluster Industry Firm

Entrepreneurial prosess Socio-economic environment

and cluster perspective. The industry –defined as profitable enterprises within the same kind of activity – did, however, hardly exist. All enterprises in SCN were in an entrepreneurial process, at stages of preparation and business developing, due to the pioneering character of the industry. A recurrent challenge for the SCN network was to build a common understanding of success factors, and how roles, responsibilities and scarce resources were to be shared among tasks and members of the network. A typical discussion was the relative importance and use of financial resources. Should these be deployed by entrepreneurs seeking (inexpensive) public money for their own investments and firm development, or should resources be spent on common goods (the business environment); network gatherings, activities in international benchlearning, network facilitator, training, research, algae surveillance, etc? Retro perspective

In retro perspective relevant levels of social context, analysis and integration of competencies should be sought at the lower part of figure 2; entrepreneurial processes and socio-economic environment. This “inverted Funnel” depicts a bottom up perspective, in which industrial initiation processes and conditions are central. Fig. 3 The entrepreneurial process The entrepreneurial project is a process which can be seen in 4 steps; preparation, business development, stabilisation and growth (Barringer and Irland, 2006). Growth is the analytic focus in most of the literature on networking and cluster initiatives (Porter, 1990; 98), as well as in the theory of the firm (Penrose, 1995). In the SCN case the “firm” was in a state of preparation and business development. Plans for scale economic production facilities had been made, built on expectations about the feasibility of highly automated production systems, the existence of well functioning logistical services and high paying markets. Many of these expectations were later proven to be unrealistic, and, furthermore, the lack of business infrastructure, e.g. site analysis competencies, makes it relevant to ask weather the initial business

research. In Mode 1, it is argued that knowledge is created and communicated largely within academic institutions and within the boundaries of highly specialised scientific disciplines. From the basis of Mode 1, a new mode is said to have emerged, Mode 2, which is seen as supplementing, not supplanting Mode 1. Mode 2 has come about largely as a consequence of the massification of education and research. Mode 2, entails a decentralised production of knowledge. In addition, scientific work is increasingly taking place across institutional and academic boundaries as Mode 2 is also a response to the more and more complex problems of modern society, which it has become increasingly difficult to address within traditional disciplinary boundaries. Mode 2 is also said to be “transdisciplinary” and to take place in a global scientific arena with many players, where the universities constitute only one player (…). Mode 2 emphasises group creativity, takes place in a flexible, socially distributed setting and quality control is much less clear. Hence, in Mode 2, quality is not only measured in terms of intellectual interest but also in terms of social, political and economic “usefulness”.” Erik Ernø-Kjølhede, Managing Collaborative Research: Unveiling the Microdynamics of the European Triple Helix (København: Copenhagen Business School Press, 2001). p. 10.

Business development

Preparation

Stabilisation Growth

start-ups should have been made within a frame of regional innovation strategies and knowledge assessment studies. To delegate responsibility to (unexperieced) entrepreneurs is, to paraphrase Nootebom (op. cit); to gamble with the weight of incidental success and add to the probability of frequent failure. In a system perspective innovation is a localised and complex learning process supported by an institutional framework. This dynamic and complex interaction represents what is considered an innovation system , i.e. a system perceived as interactive networks. Describing and analysing the institutions of technology and culture and their trajectories provide for an opportunity to investigate embeddings, path dependencies and conditions related to business environment conditions. The pattern model10 in figure 4 goes beyond the conventional (economic) general equilibrium model, in which resource endowments, technologies, institutions and culture11 are given. In the study of long-term social and economic change, the relationships among the variables must be treated as recursive and dynamic. An important advantage of the pattern model is that it avoids the necessity of choosing between a materialist conception of human action, in which actors mechanically react to changes in resource endowments, and an idealist conception in which agents respond to subjective changes in cultural endowments (convention or ideology). Another feature of the model is that it helps identify areas of ignorance. Our capacity to model and test relationships between resource endowments and technical change might be relative strong. Our capacity to model and test the relationships between cultural endowments and either technical or institutional change is relatively weak (Ruttan, op. cit.). Fig. 4. A socio-economic pattern model of interrelationships between changes in resource endowments, cultural endowment, technology and institutions Socio-economics is the study of the relationship between economic activity and social life. The field is multidisciplinary and social capital is a core concept. The Social Capital Foundation (TSCF) promotes social capital defined as a set of mental dispositions and attitudes favoring cooperative behaviors within society (www.socialcapital-foundation.org). In that sense, social capital12 can be regarded as a semantic

10 Rutten, p. 262: “The term pattern and Gestalt model is used to describe a form of analysis that links the elements of a general pattern together by logical connections. The recursive multi-causal relationships of the pattern model imply that the model is always open. Ostrom use the term framework rather than pattern model. “The framework for analyzing problems of institutional choice illustrates the complex configuration of variables when individuals … attempt to fashion rules to improve their individual and joint outcomes. The reason for presenting this complex array of variables as a framework rather than a model is precisely because one cannot encompass the degree of complexity within a single model” Ostrom, 1990, 214. Richard Nelson (2006, 195-212) views economic growth as driven by the coevolution of physical technologies and social technologies (or institutions)”. 11 Conventionally reduced to taste in neoclassical economic literature 12Bourdieu used the term in 1972 and clarified the term some years later in contrast to economic, cultural and symbolic capital. Pierre Bourdieu, Outline of a Theory of Practice (Cambridge: Cambridge University Press, 1977). The term capital is used by analogy with other forms of economic capital, as social capital is

Resource endowments

Technology

Culture Institutions

equivalent to the community spirit13. The SCN case illustrates that the community spirit interpreted as co-operation (bridging) differed between the Canadian and Norwegian case in the relation between the private and the public sector. A related social capital issue is the embedding of industrial development (of natural resource industry) in the broader perspective of land planning and environmental management. In spite of comparable biophysical conditions between PEI and Finnmark, institutional differences in land planning differed to the extent that Canadian authorities were seen as facilitators by the Canadian entrepreneurs, while the Norwegian Fiskeridirektorat in Finnmark was considered an obstacle. Institutions and epistemological pluralism Local industrial development initiatives and processes are embedded in social processes. For the natural resource based industries the political economy of environmental management represents both opportunities and restrictions. For the site dependent mussel industry coastal site planning is founded on institutional values and culture that might conflict with industrial perspectives. This adds to the complexity of information processing and integration of competencies (required for industrial success). In figure 5 it is indicated that the set of action capabilities required for natural resource based industrial development is dependent upon configuration of competencies not only vertically among different levels of the business environment, but also horizontally towards other knowledge and policy rationalities.

argued to have similar (although less measurable) benefits. Unlike traditional forms of capital social capital is not depleted by use, but in fact depleted by non-use. In this respect, it is similar to the economic concept of human capital. Putnam (2000) speaks of two main components of the concept: bonding social capital and bridging social capital. Bonding refers to the value assigned to social networks between homogeneous groups of people and bridging refers to that of social networks between socially heterogeneous groups. Bridging social capital is argued to have a host of other benefits for societies, governments, individuals, and communities. The distinction is useful in highlighting how social capital may not always be beneficial for society as a whole (though it is always an asset for those individuals and groups involved). Horizontal networks of individual citizens and groups that enhance community productivity and cohesion are said to be positive social capital assets whereas self-serving exclusive gangs and hierarchical patronage systems that operate at cross purposes to societal interests can be thought of as negative social capital burdens on society. 13 At the level of industry, cluster, region and nation social capital refers to connections within and between social networks.

Fig. 5. Epistemological pluralism in information space. Knowledge assets related to natural resource industrial development must include knowledge about alternative, complementary and competitive amenity resource uses and related institutions. In environmental planning amenity value is “produced” at the level of households, based on individual on and off-site uses. Seen from a bottom-up perspective communities of practise provide for localised inter subjective conventions (informal institutions). National and regional authorities provide for sets of formal institutions which are more or less in concert with localised, different user group preferences (Schei, 2000). Sets of capabilities indicated by the business environment pattern model in figure 5 - for the case of blue mussel industrial entrepreneurship in Finnmark and PEI – are tentatively operationalised in table 1.

Global National Regional Cluster Industry Firm

Entrepreneurial project Socio-economic

environment

Global National Regional Community of practice

Household

Actor resource use Socio-economic environment

Business

environ-

Competencies

and capabilities

Competencies

required for

success in SCN

Status quo

Finnmark

Status quo Prince Edwards

Island, Canada – 15 years

earlier

Global Market intelligence and adaptability

Knowing the blue mussel market in Europe

No market knowledge

Initially no market knowledge. Knowledge developed by gradually developing a home marked

National National innovation system functionality

Toxic algae surveillance, feasibility site analysis, land planning

Roles and respons-ibilities not identified

Industrial politics delegated to provincial level, but at the same time mussel industry is given priority in federal land planning14

Regional Regional innovation system functionality

Regional innovation strategy

Not addressed

A comprehensive knowledge assessment and development program was initiated

Cluster Dynamic industrial networks

Networking, triple helix configurations

Not addressed

Parts and responsibilities divided among provincial stakeholders

Industry A coherent system of elements and links constituting a complete value chain

Crafting an industrial development program

Grants given to a mussel grower association

Systematic industrial knowledge enhancement; communicative planning and grants given to co-operative arrangements; processing plants and marketing

Firm Commercially competent (competitive) organisations

Mechanisms for selecting capable pioneers15

Financial support

Financial and competence development support (provincial agency employees assists in most aspects of problem solving)

Entre-preneur-ial process

Business development competencies

Ability to learn and take part in knowledge development networking16

Grants but mostly loans 17. Mussel growing course

Small “learning by doing” assistance; grants and equipment

Socio-economic environ-ment

Relevant institutions

Land planning. “Industrial atmosphere”

Not addressed

Business infrastructure taken care of by public agencies; land planning, research, financial support programs

Table 1. Levels of business environment in relation to sets of competencies and capabilities in general, and SCN in particular. Column 4 and 5 indicates status quo at the time of business start-ups in The County of Finnmark, Norway, and PEI, Canada. Comparing column 4 and 5 in table 1 reveales systematic differences in business environment conditions met by the entrepreneurs in Finnmark and PEI at the time of their start-ups. Relating these differences to the different levels of analysing the business environment –given in column 1 – illustrates the need for 14 Became an important support for regional entrepreneurs and public agency planners because potential local disputes over coastal site use were settled at a higher political level. 15 Pioneer challenges are seen as first and foremost to develop sets of key competencies among regional stakeholders (to reach a minimum critical level of technology, competences and capabilities). 16 Including formation of relevant laws and regulations. 17 Based on scale economic industrial production

comprehensive knowledge assessment when initiating pioneer industrial endeavours. Column 2 and 3 indicate a structure for adressing complexity and searching for answers to the questions: Which are key-capabilities and key-success factors? Conclusions Comparing regional innovation processes between Canada and Norway a basic difference is found in the importance attributed to business environment infrastructure, and design and division of roles and responsibilities between private and public sectors in creation of knowledge assets. The insightful perspectives provided by experienced business and public development agency leaders provided new perspectives on competences and industrial development capabilities. It is found that there is a considerable potential in international benchlearning among all sectors in the Triple-Helix. None of the sectors had, however, tradition for this kind of learning, and there were structural and cultural barriers to overcome. The main difference between a Canadian industrial success and a Norwegian trial and error appears to be the application of a comprehensive development program in Canada and the lack of such in Norway. New industrial development is also an opportunity for new technology and practises. Norway is a high cost country and labour costs are higher than in alternative blue mussel producing regions. In addition, the availability of labour is limited as enterprises in SCN were rooted in small communities along a sparsely populated coast. Findings from the SCN case indicate, however, that the ambivalence towards taking a learning perspective, and start at low cost by adopting well established technology and develop locally adapted skills, added to the weight of failure. It is hypothesised that socio-economic conditions and the process of regional learning is underestimated and require more attention in current innovation policy. A challenge for the configuration of roles and responsibilities in developing pioneer nature resource based industries is to create a common understanding of key success factors and their interrelationships. A two stage pattern mapping is proposed. The first map is a basic analytic model of context, relations, process, space of opportunities and action capabilities. The second map illustrates how capabilities and elements in the space of opportunities can be related to 8 different, interacting layers of social context in a localised business environment. Each level of analysis can be associated with a derived set of competencies and action capabilities. The weight of failure in the SCN case appears higher than what can be expected from the non ergodic nature of the economy (the unforeseeable). If this is so, the explanation must be sought within the capabilities of the innovation system. The weight of failure appears systemic and related to institutional thinness and a shortage of capabilities at all levels in the business environment. The lack of an industrial national and regional innovation strategy and subsequent knowledge assessment study, can hardly be attributed to private entrepreneurs in the early phases of establishing their enterprises. Implications for policy It is indicated that entrepreneurship in the county of Finnmark suffers from a lack of regional innovation strategy and industrial development programs. These deficiencies are systemic and embedded in weaknesses in the national innovation system. Research questions

Job creation is of critical importance for rural economies that do not benefit from urban agglomeration dynamics. The abundance of land in these regions provides a potential for natural resource based industrial development. At the same time institutional thinness, low population density and geographic distances incur obstacles for viable industrial development. In this paper several research issues have been touched upon, and it is demonstrated that successful integration of competencies and derived capabilities require more intellectual capital in all sectors of the industrial development triple-helix. Benchlearning comes with a considerable potential for reducing the weight of frequent failure in radical innovation, but its

implementation must be carefully considered in relation to socio-economic conditions and the idiosyncrasies of sectoral innovation systems18. 1) The most pressing of issues seems to be the observed gab between competences available for regional industrial development and the application of knowledge and capability (regional absorptive capacity). This performance paradox deserves more attention. One approach could be to carry out knowledge assessment studies. Derived issues:

a) Which are the competencies and skills to be trained in order to build capabilities for industrial development in a comprehensive, system approach? b) The division of roles and responsibilities in pioneer industrial development between private and public sector. Is there a lack of public industrial development leadership in Norway?

2) Knowing about the knowing-doing gap is different from doing something about it. Understanding causes is helpful because such understanding can guide action. But by it self, this knowing is insufficient – action must occur. What does this imply for the scientific community and regional development agencies? 3) An issue derived from question 1 and 2 is to more systematically look into the set of competencies and capabilities, at actor and system level, which characterise the shift between different stages in regional development processes.

18See Franco Malerba, Sectoral Systems of Innovation: Concepts, Issues and Analyses of Six Major Sectors in Europe (Cambridge: Cambridge University Press, 2004).

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