innovation in portugal and in the rest of the world:a comparative analysis j.p.contzen chair...

Innovation in Portugal and in the rest of the world:a comparative

analysis

J.P.CONTZENChair Professor, IST

FLAD, LISBOA June 26-27, 2002

Introduction (1)

The PROINOV Workshop of December 2001 has been a useful base for further discussionsThe present workshop should help in developing partnerships for future action. Such action should be based on the identification of the innovation parameters that need to be addressed by Portugal and on a careful analysis of the added value of cooperative initiatives for responding to the Portuguese challenges

Introduction (2)

Learning from other countries how they tackle relevant issues of the innovation process is certainly important and could help developing the Portuguese systemIt is suggested that the comparison should concentrate on objectives, outputs, external dimension and actors of the innovation process

Parameters of Innovation: objectives (1)

Innovation is should not be considered as a finality, the ultimate goal of public policy or corporate strategy. It is only a tool to serve well defined purposesIt is a process described by a time dependent transfer function with inputs, outputs and system parameters, involving complex mechanisms, with feedback loops and built-in time constants


The output of the innovation process is linked to, but not directly proportional to, the main input i.e. R&D intensity at the same moment of time. In the mind of many decision-makers, there is a confusion between such input and the awaited output. The «Juke Box » concept where it is sufficient to put a coin and select a song to hear your favourite music is not applicable here.


INNOVATION AS A TRANSFER FUNCTION

INPUTS Ik = ii,kxi,kk(c,c') OUTPUTS

SYSTEM PARAMETERS


Why do we promote innovation?1. For the well-being of a growing

number of people through creation of wealth?

2. For improving sustainability of our Planet?

3. For reinforcing security of our nations?

4. Or just for ensuring survival?


These motivations, notably 1, 2 and 3, can be present simultaneously but their relative emphasis differs from one country to another:

US: 3 followed by 1 and a distant 2Japan: 1 and 2 followed by a distant 3Big EU nations: 1 and 2 with some 3EU candidate countries: clearly 1Asian Tigers: 1 followed by distant 2 and 3Developing countries: essentially 4


Where is Portugal situated in this respect?

Is Productivity, linked to 1, the top priority?

Parameters of Innovation: outputs (1)

The innovation process leads to various outputs:

New final products: promising, medium term effects New processes: incremental innovation, short term effectsNew services: very attractive but volatileNew systems: holistic approach, a niche to be exploitedNew organisations, new structures: essential for the success of the other outputs


These various outputs can be present simultaneously but their relative emphasis differs from one country to anotherThe economic and social structure of the country, more than its S&T capability, dictates the prioritiesThe experience of other countries in setting these priorities could be profitable for Portugal


Where do lie the most pressing needs for Portugal in this respect?

If productivity is the top priority, should innovation be aimed essentially at new processes and new structures?Portugal is successful in the services sector. Should it focus on new services?Portugal has in general rigid, aging structures. Should the emphasis in a first phase be given to organisational innovation?

The external dimension. Globalization and the Innovation Process (1)

Globalization has a direct impact on the needs for innovation and the way it is conducted:

One can innovate using a S&T base developed elsewhere. The former direct link between an endogenous S&T capability and the success of the innovation process is currently weakened


The globalization of the market offers enhanced perspectives for new products, new services and new systemsAt the same time globalization exacerbates competition. New processes and new structures contribute to increasing competitiveness


How should Portugal ride on the globalization wave? Looking at the behaviour of other countries, one might consider 5 scenarios. These scenarios are not exclusive. The innovation scenario to be adopted eventually should result probably from a combination of elements of each of them


Scenario 1 (IN/IN-PUSH) : internally developed S&T are used for developing outputs aimed at the Portuguese market. The most classical scheme. Has its limitations due to the S&T capacity of Portugal and the size of the Portuguese market. Suitable for large countries such as the US


Scenario 2 (IN/IN-PULL) : an internal demand triggers the development of outputs to be used on the Portuguese market. This variation of Scenario 1 fits well with public policies requirements of Portugal (environment, land management, fisheries, etc). It gives an impulse to the S&T systemPart of EU philosophy


Scenario 3 (IN/OUT-PUSH) : internally developed S&T are used for developing outputs aimed at external markets. Attractive scenario for niches of excellence. Risky because of the volatility of external markets. Corresponds to the South East Asia situation, applies currently to Russia and other CIS countries


Scenario 4 (OUT/IN-PULL) : use externally developed S&T to produce outputs for the Portuguese market. Don’t forget that ~99.7% of the global S&T knowledge is developed outside Portugal. A realistic scenario for most of the countries. Reflected in UK DTI thinking


Scenario 5 (OUT/OUT-PULL/PUSH) : externally developed S&T and an external demand produce outputs essentially destined for outside markets. Portugal in this case should be an Innovation processor, chosen for favorable system parameters. This scenario implies the existence of a sufficient internal S&T base to absorb adequately the external S&T output.Risky, as it is linked to the evolution of the global situation. Followed by Ireland


Should Portugal consider more actively alternative scenarios to scenario 1, i.e.:

reinforce scenarios 2 and 3 using the opportunity of the enlargement of the internal market to the EU?think further about scenarios 4 and 5?


A few specific issues for Portugal should also be considered :How Portugal should match an internal S&T capability still to be reinforced with the recourse to outside knowledge?Is the size of the Portuguese industry too limited to give full effect to innovation? (ref. UWE report of June 2002)


Does the fact that centers of decision in several industrial sectors are outside of Portugal, hamper innovation? Is Foreign Direct Investment in Portugal a stimulus or an obstacle for innovation?Should the innovation process in Portugal favour partnerships with other countries? EU? US? Asian countries?

The internal dimension (1)

While looking at the international scene, one may ask at the same time if some innovation processes could be more efficient if implemented at regional rather than at national level. Does the principle of subsidiarity apply to innovation?

The internal dimension (2)

What has been the experience of other countries in this respect? Can we learn from the role played in innovation by individual States of the US as opposed to the Federal level? Is the concept of « local clusters » (Porter,1990) still a valid recipe for Portugal?

Actors (1)

Do we need an active intervention of government or socio-economic actors in the innovation process or should we leave this chaotic, non-linear process evolve naturally towards self-organized criticality?Intervention is probably a better solution. Self-organized criticality requires time and time is politically and economically a deciding factor

Actors (2)

Government has the most important role:Create a favourable environment:

Fiscal incentives, encourage venture capitalFriendly administrative procedures, avoid excess of regulation, reform own structures for e-government Remove trade barriers, protect IPRs, ensure security for e-business

Actors (3)

Provide an adequate education system and support a dynamic S&T programmeDevelop aggressive, innovative public procurement. In the EU, such public procurement represents 14% of GDP Guarantee adequate infrastructures Promote innovation for sustainability

Actors (4)

Enterprises should develop their own efforts:Develop corporate culture for entrepreneurship Favour creativity while not rejecting experienceEnhance technology awareness Reinforce their own R&D effort

Actors (5)

Adapt management structuresConsider strategic alliances for innovation (ref. J.Solvay about size of enterprises)Promote innovation for sustainability

Do such measures exist in Portugal both at government and industry level?

In conclusion

Many questions about the promotion of innovation are still on the table.Learning from other countries should definitely help in the elaboration of relevant answers but the responsibility for giving such answers must be borne eventually by the Portuguese actors themselves.Any comparative effort must be based on interrogations formulated by these actors.

In Conclusion (1)

Government should be a good companion, rather than an intrusive mother-in-law, for Industry. A few conditions should be met:A full, in-depth cognizance on both sides of the complex process of InnovationA clear perception of what Industry expects from Government in this field

innovation in portugal and in the rest of the world:a comparative analysis j.p.contzen chair...

Documents

innovation parameters

incremental innovation

various outputs

objectives 3sheet1innovation

developing countries

eu candidate countries

new structures

moment of time