Download - Ocde Innovation and networks
Local and Regional InnovationLocal and Regional Innovation
OECD Capacity Building SeminarOECD Capacity Building Seminar
Supporting SMEs in a Time of Crisis Supporting SMEs in a Time of Crisis
Jay MitraJay Mitra
13 October, 200913 October, 2009
Definitional IssuesDefinitional Issues EntrepreneurshipEntrepreneurship = new opportunity identification & realisation = new opportunity identification & realisation
(for the purpose of this paper ‘E’ = new business creation)(for the purpose of this paper ‘E’ = new business creation)
InnovationInnovation = successful exploitation of a new idea = successful exploitation of a new idea
CultureCulture = a set of attitudes/beliefs common to a group = a set of attitudes/beliefs common to a group
Culture Culture = a set of activities concerned with moral, aesthetic, and = a set of activities concerned with moral, aesthetic, and intellectual aspects of life (activities include some element of intellectual aspects of life (activities include some element of creativity in production, communication of meaning & intellectual creativity in production, communication of meaning & intellectual property)property)
CultureCulture = a diverse way of life (from beef steak to Beethoven to = a diverse way of life (from beef steak to Beethoven to Eminem)Eminem)
Entrepreneurial CultureEntrepreneurial Culture = diverse set of attitudes, beliefs, systems, = diverse set of attitudes, beliefs, systems, institutions and structures that are connected together with a view to institutions and structures that are connected together with a view to supporting new venture creation, innovation and growth in a supporting new venture creation, innovation and growth in a particular environment & in regional innovation systems. particular environment & in regional innovation systems.
Innovation is non-linear but involves interaction Innovation is non-linear but involves interaction between many actors between many actors
Interest resulting from research on the success of the Japanese model (Freeman, 1987)
Emergence of “innovation systems” models Emergence of “innovation systems” models (Freeman, 1987)
Why Innovation Systems?Why Innovation Systems?
NationalNational innovation systems innovation systems (Freeman, 1987; Lundvall, 2007)(Freeman, 1987; Lundvall, 2007)
RegionalRegional innovation systems innovation systems (Cooke 1992; Braczyk et al., (Cooke 1992; Braczyk et al., 1998)1998)
Key Models of Innovation SystemsKey Models of Innovation Systems
Some Stylised Facts and AssumptionsSome Stylised Facts and Assumptions
F/A 1: Innovation = source of economic growthF/A 1: Innovation = source of economic growth
The endogenous model)– critical importance of The endogenous model)– critical importance of technological change in economic growth ( total technological change in economic growth ( total factor productivity accounted for 87.5% of factor productivity accounted for 87.5% of economic growth – Solow, 1957) Romer, 1990, economic growth – Solow, 1957) Romer, 1990, OECD 2003OECD 2003
Strong emphasis on role of R&D, skilled labour Strong emphasis on role of R&D, skilled labour & knowledge spillovers – greater productivity, & knowledge spillovers – greater productivity, product quality dependent on innovation product quality dependent on innovation
Some Stylised Facts and AssumptionsSome Stylised Facts and Assumptions
F/A 2: Innovation is not evenly spread but spatially F/A 2: Innovation is not evenly spread but spatially concentratedconcentrated
Well-known concentrations = Oxford; Cambridge; SE, UK; Well-known concentrations = Oxford; Cambridge; SE, UK; Lombardy; Bangalore, ShanghaiLombardy; Bangalore, Shanghai
High urban focus – OCED countries High urban focus – OCED countries
Significant local differences within countries (Camagni & Significant local differences within countries (Camagni & Capello, 1997; Keeble, 1996; Acs, 2002)Capello, 1997; Keeble, 1996; Acs, 2002)
Different measures – innovation output (patent Different measures – innovation output (patent applications) & input/output (employment in high applications) & input/output (employment in high technology manufacturing & knowledge-intensive technology manufacturing & knowledge-intensive
industries)industries)
Top TerritoriesTop Territories Patent Patent Applications Applications per million per million inhabitants. inhabitants.
Bottom territoriesBottom territories Patent Patent Applications Applications per million per million inhabitants inhabitants
Zuid Nederland, Zuid Nederland, NetherlandsNetherlands
797797 Noreste, SpainNoreste, Spain 3434
Baden Wuttenburg, Baden Wuttenburg, GermanyGermany
597597 Sud, ItalySud, Italy 1414
Bayern, GermanyBayern, Germany 473473 Attiki, GreeceAttiki, Greece 1313
Ile de France, France 313Ile de France, France 313 Isole, ItalyIsole, Italy 1111
Maner Suomi, FinlandManer Suomi, Finland 312312 French Overseas French Overseas DepartmentsDepartments
66
Eastern, UK Eastern, UK 253253 Continente, PortugalContinente, Portugal 55
Westosterreich, AustriaWestosterreich, Austria 223223 Kentriki Ellada, GreeceKentriki Ellada, Greece 44
SE, UKSE, UK 205205 Madeira, PortugalMadeira, Portugal 11
Mean Mean 131131 Acores, PortugalAcores, Portugal 00
MedianMedian 9696
Subnational Variations in European Patent Applications, 2002 S
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Top territoriesTop territories Employees in Employees in HT HT manufacturing manufacturing (% of total (% of total Manufacturing Manufacturing employees)employees)
Bottom TerritoriesBottom Territories Employees in Employees in HT HT manufacturing manufacturing (% of total (% of total Manufacturing Manufacturing employees)employees)
Aland, FinlandAland, Finland 6969 Centro, SpainCentro, Spain 3838
London, UKLondon, UK 6161 Sur, SpainSur, Spain 3838
Manner Suomi, FinlandManner Suomi, Finland 5959 Continente, PortugalContinente, Portugal 3737
Hamburg, GermanyHamburg, Germany 5757 Voreia Ellada, GreeceVoreia Ellada, Greece 3636
SE, UKSE, UK 5757 Acores, PortugalAcores, Portugal 3434
Brussels, BelgiumBrussels, Belgium 5656 Canarias, SpainCanarias, Spain 3333
Ile de France, FranceIle de France, France 5656 Madeira, PortugalMadeira, Portugal 3232
SW, UKSW, UK 5555 Kentriki Ellada, Greece Kentriki Ellada, Greece 2929
Eastern, UKEastern, UK 5454 Nisia Aigaiou, Kriti, Nisia Aigaiou, Kriti, GreeceGreece
2828
MeanMean 4747
MedianMedian 4848
Subnational Variations in Innovation-Related Employment- High Tech Manufacturing , 2003S
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Top TerritoriesTop Territories A *A * Bottom TerritoriesBottom Territories A *A *
SE, UKSE, UK 1717 Vlaams Gewest, Vlaams Gewest, BelgiumBelgium
55
Berlin, GermanyBerlin, Germany 1616 WM, UKWM, UK 55
Scotland, UKScotland, UK 1414 Sud, ItalySud, Italy 44
Schieswig Holstein, Schieswig Holstein, GermanyGermany
1414 Centro, ItalyCentro, Italy 44
Dunantul, HungaryDunantul, Hungary 1313 Yorkshire & Humber, Yorkshire & Humber, UKUK
44
Ile de France, FranceIle de France, France 1313 Attiki, GreeceAttiki, Greece 44
Kozep Magyarorszag, Kozep Magyarorszag, HungaryHungary
1212 Este, SpainEste, Spain 33
Sudosterrrich, AustriaSudosterrrich, Austria 1111 Sur, SpainSur, Spain 22
Baden Wurttermburg, Baden Wurttermburg, Germany Germany
1111 Noreste, SpainNoreste, Spain 22
MeanMean 88 Continente, PortugalContinente, Portugal 22
MedianMedian 77
Subnational Variations in Innovation-Related Employment – Knowledge Intensive Industries
Sou
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Some Stylised Facts and AssumptionsSome Stylised Facts and Assumptions
F/A 3: SMEs participate in innovation processF/A 3: SMEs participate in innovation process
Classic ‘structure-conduct-perfomance’ model = large firms have monopoly Classic ‘structure-conduct-perfomance’ model = large firms have monopoly positions, commit substantial R&Dpositions, commit substantial R&D
Alternative model = SMEs have more impact (more radical innovation, Alternative model = SMEs have more impact (more radical innovation, Baumol, 2002)Baumol, 2002)
Importance of business churning (OECD, 2003) to national productivityImportance of business churning (OECD, 2003) to national productivity
Empirical evidence suggests that both small and large firms play a part – Empirical evidence suggests that both small and large firms play a part – dependent on active links to knowledge of market (users) & knowledge of dependent on active links to knowledge of market (users) & knowledge of materials & machinery (suppliers) & non-firm organisationsmaterials & machinery (suppliers) & non-firm organisations
Small firms rely heavily on external environmentSmall firms rely heavily on external environment
Spatial business clusters – association between spatial concentrations & Spatial business clusters – association between spatial concentrations & rates of technological innovation (Baptista and Swann, 1998) rates of technological innovation (Baptista and Swann, 1998)
FrameworkFramework Mechanisms supporting SME innovationMechanisms supporting SME innovation
Porterian Clusters (Porter, Porterian Clusters (Porter, 1990019900
Rivalry between competitors; specialised facotrs of production (land, Rivalry between competitors; specialised facotrs of production (land, labour, capital); large & growing demand & sophisticated customers; labour, capital); large & growing demand & sophisticated customers; related industries & support institutions related industries & support institutions
Marshallian districts (Pyke, Marshallian districts (Pyke, et al, 1990)et al, 1990)
Non pecuniary externalities from knowoedge spillovers through Non pecuniary externalities from knowoedge spillovers through informal personal exchanges, customer supplier transactions; labour informal personal exchanges, customer supplier transactions; labour pooling; inter-firm linkagespooling; inter-firm linkages
Innovative milieuxInnovative milieux Linkages between firms through labour mobility & informal networking, Linkages between firms through labour mobility & informal networking, supporting collective learning; reduction of uncertainty supporting collective learning; reduction of uncertainty
Learning Regions (Storper, Learning Regions (Storper, et al, 1997; Morgan, 1997)et al, 1997; Morgan, 1997)
Untraded interdependencies between local firms & other organisations; Untraded interdependencies between local firms & other organisations; use of formal & informal information & collaboration networks & labour use of formal & informal information & collaboration networks & labour market interactions; facilitated by trust & social capital & technology market interactions; facilitated by trust & social capital & technology support organisationssupport organisations
Local Innovation Systems Local Innovation Systems (Cooke, Heindrich & (Cooke, Heindrich & Braczyk, 2004; Howells, Braczyk, 2004; Howells, 1999)1999)
Knowledge generation, exchange & exploitation in system with Knowledge generation, exchange & exploitation in system with important learning interactions among suppliers, customers, public important learning interactions among suppliers, customers, public research organisations, financial institutions. Supported by local research organisations, financial institutions. Supported by local policiespolicies
Frameworks for Analysing Innovation Process in Agglomerations S
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2005
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Innovation = 80% of productivity growth and comparable figure for GDP Innovation = 80% of productivity growth and comparable figure for GDP (Freeman, 1994)(Freeman, 1994)
Regional disparities in innovation & GDP Regional disparities in innovation & GDP (Acs, 2002; Cooke (Acs, 2002; Cooke et alet al., 2002)., 2002)
Innovation = higher in regions with more knowledge generation e.g. R&D by Innovation = higher in regions with more knowledge generation e.g. R&D by firms & institutions firms & institutions (Acs, 2002)(Acs, 2002)
Region = new focus of economic policy Region = new focus of economic policy (Cooke (Cooke et alet al. 2003). 2003)
Why is a Regional Innovation System important?Why is a Regional Innovation System important?
Why are Local/regional Innovation Systems Relevant?Why are Local/regional Innovation Systems Relevant?
Most processes driving innovation occur locally – Most processes driving innovation occur locally – knowledge embedded in people ; distance decay effects knowledge embedded in people ; distance decay effects in rate of knowledge & information links;in rate of knowledge & information links;
SMEs have spatially restricted search patterns for SMEs have spatially restricted search patterns for collaborative partnerships or technological inputs;collaborative partnerships or technological inputs;
Different localities have different sector specialisations & Different localities have different sector specialisations & distinct sets of innovation processes;distinct sets of innovation processes;
Strong local differences in innovation performance Strong local differences in innovation performance
Type of FailureType of Failure Nature of FailureNature of Failure Potential local policy Potential local policy actionsactions
Information failureInformation failure Barriers to flow of information on Barriers to flow of information on innovation opps. Lead to missing markets innovation opps. Lead to missing markets & constraints for SMEs in obtaining & constraints for SMEs in obtaining finance, partners, etc.finance, partners, etc.
Promotion of networks & Promotion of networks & partnerships. Public support to partnerships. Public support to SME research projectsSME research projects
Public goodsPublic goods Undersupply of non rival goods & non Undersupply of non rival goods & non excludable goods that contribute to SME excludable goods that contribute to SME innovation – e.g. university research innovation – e.g. university research
Public policy of basic Public policy of basic innovation infrastructure locallyinnovation infrastructure locally
ExternalitiesExternalities Undersupply of activities that benefit Undersupply of activities that benefit others in addition to producers – e.g. others in addition to producers – e.g. training of highly skilled labour; reduced training of highly skilled labour; reduced incentives to SME innovationincentives to SME innovation
Direct public support for SME Direct public support for SME research projects for training of research projects for training of highly skilled labour in local highly skilled labour in local specialismsspecialisms
MonopoliesMonopolies Incumbent firms restrict entry through Incumbent firms restrict entry through branding & other behaviour, constraining branding & other behaviour, constraining ability of innovative, new & small firms to ability of innovative, new & small firms to enter market & compete enter market & compete
““Second best” policies Second best” policies supporting SMEs in order to supporting SMEs in order to “level the playing field”. “level the playing field”. Support of new firm entry in Support of new firm entry in local sector specialsims.local sector specialsims.
IndivisibilitiesIndivisibilities Indivisible cost in creating knowledge. If Indivisible cost in creating knowledge. If marginal cost pricing is used fixed cost is marginal cost pricing is used fixed cost is irrecoverable, constraining production of irrecoverable, constraining production of knowledge by SMEs & others knowledge by SMEs & others
Public funding of public & Public funding of public & private research projects with private research projects with
Potential spin offs for SMEsPotential spin offs for SMEs
Market Failures and SME InnovationS
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Type of FailureType of Failure Nature of FailureNature of Failure Potential Local policy actionPotential Local policy action
Infrastructure ProvisionInfrastructure Provision Underinvestment in local infrastructure with Underinvestment in local infrastructure with which firms interact – e.g. communications which firms interact – e.g. communications infrastructureinfrastructure
Incentives for private or public communications & Incentives for private or public communications & knowledge transfer infrastructuresknowledge transfer infrastructures
Transition & lock in Transition & lock in failuresfailures
Firms & localities are highly capable in their own Firms & localities are highly capable in their own technological areas but in related ones. Unable technological areas but in related ones. Unable to switch from existing technologies to switch from existing technologies
Incentives for technological activities that broaden Incentives for technological activities that broaden firm & organisational capabilities & nurturing of firm & organisational capabilities & nurturing of emerging systemsemerging systems
Institutional failuresInstitutional failures Institutional & regulatory context has unexpected Institutional & regulatory context has unexpected negative impactnegative impact
Monitoring & adjusting local institutions & Monitoring & adjusting local institutions & regulationsregulations
Learning failuresLearning failures Firms may not be able to learn rapidly & Firms may not be able to learn rapidly & effectively effectively
Developing firm capabilities through human capital Developing firm capabilities through human capital programmes, support for R&D 7 technology programmes, support for R&D 7 technology dissemination policies. Opening channels to dissemination policies. Opening channels to knowledge sourcesknowledge sources
Suboptimal balance bet. Suboptimal balance bet. exploitation & exploitation & exploration exploration
Local innovation concentrations may work too Local innovation concentrations may work too much on exploitation & not enough on much on exploitation & not enough on exploration (or vice versa)exploration (or vice versa)
Using public procurement & funding to support Using public procurement & funding to support exploration, introducing diversity in industry by exploration, introducing diversity in industry by supporting new & small firms; supporting variety supporting new & small firms; supporting variety through dissemination of codified information through dissemination of codified information
Suboptimal balance bet. Suboptimal balance bet. selection & varietyselection & variety
Local innovation concentrations may have too Local innovation concentrations may have too rapid selection whereby underperforming firms rapid selection whereby underperforming firms close, & too little variety, in terms of firms & close, & too little variety, in terms of firms & activities carrying potentially promising activities carrying potentially promising technologies technologies
Strengthening competition policies & use industrial Strengthening competition policies & use industrial & technological policies to support new firms & technological policies to support new firms carrying potentially promising technologies ( or carrying potentially promising technologies ( or weaken competition policies & limit use of weaken competition policies & limit use of industrial & technological policies supporting firms industrial & technological policies supporting firms that are likely to fail) that are likely to fail)
Appropriability trapsAppropriability traps Too stringent appropriability may limit Too stringent appropriability may limit spread of knowledge within innovation spread of knowledge within innovation systemsystem
Encouraging local knowledge transfers Encouraging local knowledge transfers
Complementarities Complementarities failuresfailures
The appropriate complementarities may not be The appropriate complementarities may not be present in local innovation systempresent in local innovation system
Formation of R&D networks; industry university Formation of R&D networks; industry university interfaces & bridging systemsinterfaces & bridging systems
System Failures & SME Innovation source: OECD, 2005, Lundvall & Borras, 1997
““Regional innovation system consists of interacting Regional innovation system consists of interacting
knowledge generationknowledge generation and and exploitationexploitation sub-systems sub-systems linked to global, national and other linked to global, national and other
regional innovation systems regional innovation systems for commercializing new for commercializing new knowledge” knowledge” (Cooke, 2004 p.3)(Cooke, 2004 p.3)
Emphasis: Firms in interaction with other firms & knowledge infrastructure at regional level.
What is Regional Innovation System?What is Regional Innovation System?
ESSENTIAL NOTIONS:ESSENTIAL NOTIONS:
Tacit knowledgeTacit knowledge = Innovation involves face-face interaction between actors = Innovation involves face-face interaction between actors due to tacit knowledge e.g. experience due to tacit knowledge e.g. experience ((Maskell and Malmberg, 1999))
Costs of interactionCosts of interaction = = Regional level has lower distance, transportation & Regional level has lower distance, transportation & communication costs communication costs (Audretsch, 1998; Krugman, 1991)(Audretsch, 1998; Krugman, 1991)
Local networksLocal networks = Innovation is higher in regions with local networks of = Innovation is higher in regions with local networks of SMEs and R&DSMEs and R&D ((Maskell & Malmberg, 1999; Asheim & Gertler, 2004)
Regional Innovation Systems (RIS)Regional Innovation Systems (RIS)
1.1. Knowledge Generation:Knowledge Generation:
Public & private research laboratoriesPublic & private research laboratories
Universities & Colleges for scientific & technical trainingUniversities & Colleges for scientific & technical training
Firms thatFirms that transfer knowledgetransfer knowledge
2.2. Knowledge Exploitation:Knowledge Exploitation:
Firms with regional & global value chain relationshipsFirms with regional & global value chain relationships
Venture capitalistsVenture capitalists
ConsultantsConsultants
Adapted from: Cooke Adapted from: Cooke et. al., (2003)2003)
Sub-Systems of RISSub-Systems of RIS
1.1. Innovation process is social Innovation process is social
Innovation = involves face-face interaction Innovation = involves face-face interaction between actors internal & external to the firmbetween actors internal & external to the firm ((Maskell and Malmberg, 1999))
Basic Arguments of RISBasic Arguments of RIS
2.2. Region facilitates interactionRegion facilitates interaction
Region = lower distance, transportation & communication costs for Region = lower distance, transportation & communication costs for interaction (Krugman, 1993)interaction (Krugman, 1993)
Face-to-face interaction and cooperation are easier at the regional Face-to-face interaction and cooperation are easier at the regional levellevel
Basic Arguments of RISBasic Arguments of RIS
3. Regional concentration of R&D firms & institutions boosts 3. Regional concentration of R&D firms & institutions boosts innovationinnovation
Combination of knowledge generation (e.g. by universities) & Combination of knowledge generation (e.g. by universities) & exploitation (by SMEs with local networks) boosts innovationexploitation (by SMEs with local networks) boosts innovation
Local concentration increases capacity to use external knowledge Local concentration increases capacity to use external knowledge for innovationfor innovation
Adapted from: Adapted from: Cooke et al., 2003Cooke et al., 2003 ; Asheim & Gertler, 2004
Basic Arguments of RISBasic Arguments of RIS
4. External Links boost innovation
Entering global marketsEntering global markets
Sourcing Knowledge from global sources (e.g. R&D)Sourcing Knowledge from global sources (e.g. R&D)
Basic Arguments of RISBasic Arguments of RIS
Entrepreneurship – requires knowledge and resource seeking (e.g. Entrepreneurship – requires knowledge and resource seeking (e.g. technical knowledge, finance, consultancy etc.) technical knowledge, finance, consultancy etc.)
Innovative activity of firms and entrepreneurs are largely based on localised Innovative activity of firms and entrepreneurs are largely based on localised resources (Asheim et. al., 2003; Cooke et. al., 2000)resources (Asheim et. al., 2003; Cooke et. al., 2000)
RIS provides access to critical resources for entrepreneurship within RIS provides access to critical resources for entrepreneurship within proximityproximity
Links between RIS and EntrepreneurshipLinks between RIS and Entrepreneurship
Grass rootsGrass roots – SME dominated or industrial district (less public – SME dominated or industrial district (less public governance) governance)
NetworkedNetworked – Associated between regional governance & industry – Associated between regional governance & industry pronouncedpronounced
CentralistCentralist – Governance is strongly centralised – Governance is strongly centralised
Cooke et. al (2003)Cooke et. al (2003)
RIS Public Governance SystemRIS Public Governance System
Problem of RIS: Few Regions in the world are high-tech clusters
Typology of Regional Innovation SystemsTypology of Regional Innovation Systems
Globalist California North-Rhine Westphalia Mid-Pyrenees
Interactive Catalonia Baden-Wurttemberg Quebec
Localist Tuscany Tampere Northern Ireland
Grassroots Networked Centralist
Source: Braczyk et. al. 1998; Cooke et. al. (2003 p.368)
Public Governance System
Bu
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Identify Strong Sectors/Candidate ClustersIdentify Strong Sectors/Candidate Clusters
Investigate Regional ClustersInvestigate Regional Clusters
Identify Competitive AdvantageIdentify Competitive Advantage
Identify Innovation PracticesIdentify Innovation Practices
Cooperative or Individualistic?Cooperative or Individualistic?
Innovation Support SystemInnovation Support System
Developing Innovation SystemsDeveloping Innovation Systems
1.1. Infrastructure issuesInfrastructure issues
2.2. SuperstructureSuperstructure
Conditions for Assessing RISConditions for Assessing RIS
Conditions for Higher & Lower RIS PotentialConditions for Higher & Lower RIS Potential
Infrastructure level Regional private equityRegional private equity Policy influence on infrastructurePolicy influence on infrastructure Regional university-industry strategyRegional university-industry strategy
Superstructural level
Institutional dimension Co-operative cultureCo-operative culture Interactive learningInteractive learning Associative consensusAssociative consensus
Organisational Dimension (firms) Worker mentoringWorker mentoring ExternalisationExternalisation Interactive innovationInteractive innovation
Organisational dimension (policy) MonitoringMonitoring ConsultativeConsultative NetworkingNetworking
Decentralised spendingDecentralised spending National financing organisationNational financing organisation Limited influence on infrastructureLimited influence on infrastructure
Competitive cultureCompetitive culture IndividualisticIndividualistic Institutional dissensionInstitutional dissension
Self acquired skillsSelf acquired skills InternationalisationInternationalisation Stand alone R&DStand alone R&D
ReactingReacting AuthoritativeAuthoritative HierarchicalHierarchical
Adapted from: Cooke et. al. (2001)
Higher RIS potential Lower RIS potential
National Policy
Information
Legitimation
Ministrics Assembly
SME Agency Business associates
FDI Agency Training agency
Trade Board Universities
Regional steering Committee
National Research Institutes
National technology
agency
Social partners Research CommunityVenture Capitalists Local Cooperative Forum Local GovernmentTechnology Consultants Chambers of commerce
ReportingRequirement
Information
Programmeapproval
Strategy
Advice
Information
Measures Coordination
Proposals
Regional Enterprise Support System for InnovationRegional Enterprise Support System for Innovation
Source: Braczyk, Cooke and Heinreich, eds. (1998)
Assets
CapabilitiesConnectivities
Public investment in technology developmentCreation of S&T parksAttracting inward investmentSupporting access to finance
Education & Training of individualsAdvice, training & consultancy to SMEsInfluencing motivation & abilities of universities &Research organisations in collaborative research with SMEs
Creation & strengthening oflocal networksEncouraging local innovation collaborationsCreation of bridging institutionsEnsuring openness of local innovation system to sources of knowledge outside system
Policy Levers to Strengthen Local Innovation Systems
Concepts Definitions and differences
Regional cluster
• A concentration o f ‘interdependent’ firms within the same or adjacent industrial sectors in a small geographic area
Regional innovation network
• Increasingly organised co-operation (agreements) between firms, stimulated by trust, norms and conventions
Regional innovation system
• Co-operation between firms and different organisations for knowledge development and diffusion
Learning regions
• Increasingly organised co-operation with a broader set of civil organisations and public authorities that are embedded in social and regional structures.
Comparison RIS & other Regional ModelsComparison RIS & other Regional Models
RISs are rare and newly discoveredRISs are rare and newly discovered
Hard to detect systemic regional innovationHard to detect systemic regional innovation
In Europe = high dependence on public expenditure In Europe = high dependence on public expenditure
Source: Cooke (2001)Source: Cooke (2001)
Problems with Public Support for RISProblems with Public Support for RIS
RIS problems Type of Problem Typical problem region Possible policy tools
Organisational ‘thinness’
Lack of relevant local actors Peripheral areas
Link firms to external recourses + acquisition
Fragmentation
Lack of regional co-operation and mutual trust Some regional clusters Develop regional ‘club goods’
Loc k-in
Regional industry specialised in outdated technologies
Old industrial regions and raw material based peripheral
Open up networks towards external actors + local mobilisation
Isaksen (2001)
Problems with Public Support for RISProblems with Public Support for RIS
Differences: National vs. Regional SystemsDifferences: National vs. Regional Systems
National Innovation National Innovation SystemsSystems
Regional Innovation Regional Innovation SystemsSystems
Inter-firm relations - Market- Market - Clusters- Clusters
Knowledge infrastructure - Formal R&D laboratories- Formal R&D laboratories
- National R&D - National R&D laboratorieslaboratories
- University research- University research
- Firm external sources of - Firm external sources of knowledgeknowledge
Public Sector (government)
- Emphasis on national - Emphasis on national levellevel
- Emphasis on regional - Emphasis on regional levellevel
Financial institutions - Formal savings- Formal savings
- Formal financial sector- Formal financial sector
- Venture capital- Venture capital
- Informal financial sector- Informal financial sector
Source: Acs (2002)
A Region of 1500 Square Miles in California, USA Region of 1500 Square Miles in California, US
One of the “most” innovative high-tech regions in the worldOne of the “most” innovative high-tech regions in the world
1.35 million jobs1.35 million jobs
Headquarters for over 400 public companiesHeadquarters for over 400 public companies
Average salary of $65,000Average salary of $65,000
Venture Capital Investments of over $8 billionVenture Capital Investments of over $8 billion
Case Study: Silicon Valley Case Study: Silicon Valley
Source: Stanford University
Past:Past: Linkages to Federal funding agencies and flood of Government Sponsored Linkages to Federal funding agencies and flood of Government Sponsored
Research at universities (Cold war effect in1950s)Research at universities (Cold war effect in1950s)
Present:Present: Cutting-edge education to company employeesCutting-edge education to company employees
Small Business Innovation Research (SBIR) grants: Over $2B awarded in Small Business Innovation Research (SBIR) grants: Over $2B awarded in U.S. in 2006U.S. in 2006
“knowledge generation” in Silicon Valley (1)
Source: Stanford University
Figure 5: Engineering School Ph.D. Production
0
20
40
60
80
100
120
140
160
180
Electrical
Ph.D. Total in Enginerring
“knowledge generation” in Silicon Valley (2)
Source: Stanford University
Stanford graduates, faculty & staff have launched approximately 1200 companies in the last 50 years
More than 50% of Silicon Valley product is due to companies started by Stanford alumni
“knowledge Exploitation” in Silicon Valley
Source: Stanford University
Silicon Valley Innovations: Past & PresentSilicon Valley Innovations: Past & Present
Source: Stanford University
Some Silicon Valley companies
RIS consists of knowledge generation and exploitation subsystemsRIS consists of knowledge generation and exploitation subsystems
New focus of economic policyNew focus of economic policy
Think local, act global - External links are important for RISThink local, act global - External links are important for RIS
RISs are rare and rely heavily on public expenditure RISs are rare and rely heavily on public expenditure
ConclusionsConclusions
Some Preliminary QuestionsSome Preliminary Questions
Can/does higher education make a difference?Can/does higher education make a difference?
Does it make a difference by itself or in Does it make a difference by itself or in collaboration with other institutions?collaboration with other institutions?
Do small businesses interact with this Do small businesses interact with this collaborative venture?collaborative venture?
Does such interaction generate new businesses? Does such interaction generate new businesses?
University Culture and University Culture and Entrepreneurship Entrepreneurship
What unites academics more? Car Parking or intellectual What unites academics more? Car Parking or intellectual discourse?discourse?
What price entrepreneurship?What price entrepreneurship?
““Loosely coupled systems” (Weick 1976) Loosely coupled systems” (Weick 1976)
Collegial academy of chaosCollegial academy of chaos
Four cultures of “collegium”, “bureaucracy”, “corporation” Four cultures of “collegium”, “bureaucracy”, “corporation” and “enterprise” (McNay, 1995) and “enterprise” (McNay, 1995)
Un
iver
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Off
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Lea
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sUniversity/B-School Learning FocusUniversity/B-School Learning Focus Entrepreneurs’ Learning NeedsEntrepreneurs’ Learning Needs
Critical judgment after analyzing large amounts Critical judgment after analyzing large amounts of informationof information Gut feel decision making with limited Gut feel decision making with limited
informationinformation
Understanding and recalling the information Understanding and recalling the information itselfitself Understanding the values of those who Understanding the values of those who
transmit/filter informationtransmit/filter information
Assuming commonality of goalsAssuming commonality of goalsRecognizing the widely varied goals of different Recognizing the widely varied goals of different stakeholdersstakeholders
Seeking (impersonally) to verify the absolute Seeking (impersonally) to verify the absolute truth by study of informationtruth by study of information Making decisions on the basis of judgment of Making decisions on the basis of judgment of
trust & competence of people. trust & competence of people.
Understanding the basic principles of the society Understanding the basic principles of the society in the metaphysical sensein the metaphysical sense Seeking to apply and adjust in practice to the Seeking to apply and adjust in practice to the
basic principles of societybasic principles of society
Seeking the correct answer, with (enough) time Seeking the correct answer, with (enough) time to do itto do it Developing the most appropriate solution often Developing the most appropriate solution often
under time-pressureunder time-pressure
Learning in the class roomLearning in the class roomLearning while & through doingLearning while & through doing
Gleaning information from experts and Gleaning information from experts and authoritative sources for the sake of its authoritative sources for the sake of its genuineness genuineness
Gleaning information from any and everywhere Gleaning information from any and everywhere & assessing its practical usefulness& assessing its practical usefulness
Evaluation through written assessmentEvaluation through written assessmentEvaluation through judgment of people and Evaluation through judgment of people and events through direct feedbackevents through direct feedback
Success in learning measured by passing of Success in learning measured by passing of knowledge-based examinationsknowledge-based examinations Success in learning measured by solving Success in learning measured by solving
problems, learning from failures and providing problems, learning from failures and providing useful products and services to the society.useful products and services to the society.
Some Stylised Observations 1/2Some Stylised Observations 1/2 Patterns of use of university (especially research) output:Patterns of use of university (especially research) output:
Economic stability = pure research; instability = Economic stability = pure research; instability = commercialisationcommercialisation
But note a few caveatsBut note a few caveats::
a) Origins of university activity– industry focuseda) Origins of university activity– industry focused Technische Mittelschulen, Technische Hochschulen, Technische Mittelschulen, Technische Hochschulen,
Fachhoschulen in Germany; USA – University of Akron Fachhoschulen in Germany; USA – University of Akron (polymers & elastomers), Cornell’s electrical engineering dept. (polymers & elastomers), Cornell’s electrical engineering dept.
b) advent of science in engineering with government superseding b) advent of science in engineering with government superseding industry & emergence of divide between corporate and university industry & emergence of divide between corporate and university R&DR&D
Some stylised observations Some stylised observations 2/22/2
Economic sectors with most rapid growth are closest to science Economic sectors with most rapid growth are closest to science – microelectronics, software, biotech and new materials.– microelectronics, software, biotech and new materials.
Above industries also have high ‘social qualities’ – high wages, Above industries also have high ‘social qualities’ – high wages, good environmental characteristics, low barriers to entry for good environmental characteristics, low barriers to entry for small firms, relative independence from geographic constraintssmall firms, relative independence from geographic constraints
Universities benefit from government policy to encourage Universities benefit from government policy to encourage entrepreneurship (licensed inventions from govt. grants entrepreneurship (licensed inventions from govt. grants (Mowrey, Nelson & Sampat, 1999)(Mowrey, Nelson & Sampat, 1999)
Real spur to entrepreneurship in universities = business Real spur to entrepreneurship in universities = business opportunity from basic scienceopportunity from basic science
Most revenues from patents of a very basic nature for process Most revenues from patents of a very basic nature for process or tools & licensed non-exclusivelyor tools & licensed non-exclusively
The Forces At Work - The Forces At Work - RegionalisationRegionalisation
New & diverse client bases for teaching & researchNew & diverse client bases for teaching & research
From traditional relationships with large corporations to regional From traditional relationships with large corporations to regional clusters of firms (not just money but changes in nature & scope of clusters of firms (not just money but changes in nature & scope of technologies) technologies)
Regionalisation of regulating institutions leads to regional Regionalisation of regulating institutions leads to regional networking & institutional capacity buildingnetworking & institutional capacity building
Universities as regional intermediaries & commentatorsUniversities as regional intermediaries & commentators
Regional networking as institutional survivalRegional networking as institutional survival
Ambivalent relationship with territoryAmbivalent relationship with territory
The Forces at Work – Forms of The Forces at Work – Forms of LearningLearning
New mode of learning production from inter-New mode of learning production from inter-disciplinary research centres & reliance on disciplinary research centres & reliance on external funding (Gibbon, 1994)external funding (Gibbon, 1994)
Interactive forms of learning inherently bound in Interactive forms of learning inherently bound in time & space – regional context for learning & time & space – regional context for learning & knowledgeknowledge
International research transferred to specific International research transferred to specific localities through universitieslocalities through universities
Forces at Work – The New Forces at Work – The New CultureCulture
The new student – decentred world & multiple livesThe new student – decentred world & multiple lives
Diverse forms of preparationDiverse forms of preparation
Episodic & fragmented engagement not holistic, intense, linear forms of Episodic & fragmented engagement not holistic, intense, linear forms of learninglearning
Research generated in heterogeneous environments of producers, brokers Research generated in heterogeneous environments of producers, brokers and usersand users
Knowledge is more contextualised & intensely reflexiveKnowledge is more contextualised & intensely reflexive
Communicative culture – from cerebral, objective, codified & symbolic (Communicative culture – from cerebral, objective, codified & symbolic ( logoslogos) ) to visual, intuitive, volatile, subjectiveto visual, intuitive, volatile, subjective
Wider social distribution of knowledge generation Wider social distribution of knowledge generation
(source: Scott, 2004) (source: Scott, 2004)
The Knowledge Economy FactorR&D, Universities, Small Firms, Skills Sets and
ICT
A Role For Learning, Research and Higher Education;
Catalysts For An Entrepreneurial Culture?
The East of England