The Norwegian System of
Innovation in an international
perspective
ESST lecture: A report from a research
project.
Svein Erik Moen, TIK, UiO
Aim of the lecture
• Present the main points from Edquist’s
chapter (2004)
• Discuss the Norwegian System of
Innovation from an international
perspective (Draft by Grønning, Moen,
Olsen, Steinsland 2005)
The emergence and development
of the SI approach
• The alleged systemic nature of innovation:
It often happens collaboration or in
interdependence with other firms, on nonfirm entities. How do we explain this?
• Lundvall (1992): Towards a theory of
innovation and interactive learning
• Nelson (1993): A comparative analysis
• No generally accepted definition of a
national innovation system!
NSI definition (Edquist 1997)
• Innovations: Product innovations are new or
better material goods as well as intangible
services. Process innovations are new ways of
producing good or services. They may be
technological or organisational (Edquist 2004:
182)
• SI: All important economic, social, political,
organisational, institutional and other factors that
influence the development, diffusion, and use of
innovations. (Edquist 1997: 14, 2004: 183)
Strengths of using a system of
innovation approach (Edquist)
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emphasis on innovation and learning
holistic and interdisciplinary perspective
evolutionary perspectives
encompass both product and process
innovations
• Interdependence and non-linearity
• Considers institutional aspects
Weakness of the SI approach
• “It is not a formal theory, in the sense of
providing propositions regarding causal
relations among variables.” (Edquist 2004:
186)
• “At the present, it is not a matter of
transforming the SI approach into a
“general theory of innovation…” (Edquist:
2004: 187).
What is a system?
• Constituents: Some kind of a) components
and b) the relations among them. These
should form a coherent whole.
• A system has a function
• It must be possible to discriminate
between the system and the rest of the
world
The main components of SIs
• “Organisations are formal structures that are
consciously created and have an explicit
purpose.” (Edquist and Johnson 1997: 46-7)
• “Institutions are sets of common habits, norms,
routines, established practices, rules, or laws
that regulate the relations and interactions
between individuals, groups, and organisations.”
(Edquist and Johnson 1997: 46)
Activities in SIs
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Provision of Research and Development
Competence building
Formation of new product markets
Articulation of quality requirements
Creation and changing organisations for the
development of innovation
Networking through markets and other mechanisms
Creating and changing institutions
Incubating activities administrative support etc
Financing of innovation processes
Provision of consultancy services
Things that Edquist identifies to
studied in the future
• A need of comparative case studies
• Integrate conceptual and theoretical work
with the case studies
• Develop SI framework and theoretical
elements
• More attention to non-technological and
intangible kinds of innovation
Historiske linjer i det Norske
innovasjonssystemet
• Fisk og tømmer var hovedeksportnæringene gjennom
1900-tallet, altså baserte økonomien seg på en
utviklingsblokk bestående av typisk høstingsindustri.
• Den internasjonale utviklingen i prosessindustrien ga
muligheter for en ny utviklingsblokk i Norge. Fra
begynnelsen av 1900-tallet ble kraftkrevende industri
bygd ut. Basert på Vannkraft, utenlandske investeringer,
og ny teknologi innenfor metaller og kunstgjødsel
• Andre sektorer fikk også stor vekt på den tiden som f.eks
shipping og hvalfangst, hvor flåtene ble modernisert.
Papirindustrien fikk også etter hvert stor betydning, og
var I 1950, Norges største eksport sektor.
Historiske linjer i det Norske
innovasjonssystemet
• Store industrielle grupper ikke har vært særlig
eksisterende i Norge hvis vi sammenlikner oss med f.eks
Sverige. Norge har alltid vært et land med mange småog mellomstore selskaper, som til eksempel innen fisk,
møbler, og verkstedsindustri.
• En viktig utviklingsblokk i det Norske systemet er i dag
sentrert rundt olje og gass og den servicesektoren som
knytter seg til det norsk oljesystemet.
• Med Statoil og Saga Oil, og ekspansjonen til Norsk
Hydro fikk vi Norske aktører med store finansielle
resurser. Statlig eierskap har vært viktig for utviklingen
av disse store selskapene.
• Regionale trender
Development blocks in the system
Main natural resources
development block
Other existing and
potential development
blocks
LARGE FIRMS:
SMEs:
Oil extraction
Hydroelectricity
Mechanical engineering
Metals
Corporate fisheries and
aquaculture
Pulp & paper
Shipping and oil supply
Aquaculture supply
Alternative energy
sources
Family owned fisheries &
aquaculture
LARGE FIRMS:
SMEs:
Telecom
Food processing and
distribution
ICT SMEs
Furniture
Biotech
Medical technology
Innovation intensity in the
Norwegian NSI according to the
Community Innovation Survey
• Overall a negative trend…
• Difference between SMEs and large firms
• Enterprises engaged in innovation cooperation
is considerably higher than the EU average.
• Obstacles to innovation activities in Norway are
less than the EU average
• Enterprises with innovation activities were 3
percent lower that the EU average
• The effects of innovation during 1998-2000
where considerably lower than the EU average
Activities that influence innovation:
Provision of R&D
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1,6% of GDP (2001). Decreasing investments
in R&D in relation to GDP, compared to the
OECD (1991-2001)
Publication and citation analysis: relatively low
growth rate (1982-2001), weak within
engineering, physics, computer science.
Strong within geosciences and ecology
Patents: Many Norwegian patents within ship
building, pumps/turbines, drilling techniques
Norway vs. OECD
Activities that influence innovation:
Competence building
• Norway as Nr. 1 in the Human
Development index
• High growth of students since the 1990s
(Universities, scientific colleges, state
colleges)
• High growth of people with higher
education within the labor force, especially
ICT, oil/gas and mining
• Low ranking in mathematics
Activities that influence innovation:
Demand side factors
• Public procurement is one of the factors which
can affect the demand and the creation of new
markets. The Ministry of Labour and
Government Administration is responsible for
policy on public procurement:
– ICT projects in the public sector: Efficiency
– Encouraging the commercialisation of new
technologies in the Oil industry (support services)
– Quality requirements
• Public attempts to develop new markets have
been very limited (OECD 2004)
Activities that influence innovation:
Provision of organizations
• Relatively low degree of the creation of
technology-based business organizations
• Relatively low share of spin-offs from “high
tech” manufacturing: Of all spin-off firms in
Norway in the period 1999-2000, 11.2%
were spin-offs from “high-technology”
industries.
Activities that influence innovation:
Networking, interactive learning
and knowledge integration
According to CIS:
– suppliers are the most used partners in
collaboration and innovation
– Collaboration with customers are the most
important for innovation
– Collaboration with universities and research
institutes has low degree of importance for
innovation
Activities that influence innovation:
Support services for innovating
firms
• SIVA: 1500 companies are receiving
support
• Science parks
• Venture capital: Low level compared to
other European countries
• Innovation Norway: Grants and loans
• Consultancy services: e.g. accounting,
legal services, training, marketing…
Consequences of innovations?
• A paradox: Low degree of innovation
according to the CIS while very high GDP,
productivity growth?
• For Norwegian firms: Innovations have a
positive effect on technology and
competence within firms, but not
necessarily with regard to turnover.
Innovation policies pursued
• 1st generation policy (1946-70s): linear
progression from basic science to applied
technology.
• 2nd generation policy: (1978-1992), “hightechnology” (1992-1999) “Competitive
advantage”
• 3rd generation policy (1999-2004): “more R&D”,
focus on health, marine research, energy,
medicine, ICT. (2003-) “Holistic Innovation
Policy” (but research driven?)
Strengths of the NSI
• Strong competence and competitive within
oil, gas, marine recourses, hydroelectric
power, and shipping (“low” and “mediumlow” tech. Patenting and scientific
specialization also reflects this
• High productivity growth
• Relatively strong education system
Weaknesses
• Low innovation intensity (CIS)
• Low effect of innovations (performance)
• Limited availability of risk capital in urban
areas
• Incubators have vague aims, and not
directed towards particular sectors
• Relatively little done in the area of tax
incentives to facilitate the early phases of
firms
Future innovation policy
• 1) Increased attention on the possibilities of further and
advanced exploitation of the natural endowment based
development block;
• 2) Examine the realism and need for specific percentage
‘push’ goals when it comes to R&D expenditure, and
rather devise sector based ‘pull’ goals;
• 3) Abolition of the general and integrated approach
consisting in integrating multiple aims within one and the
same policy, and instead devise competitive instruments
where such symbiosis may (or may not) be part of the
end result.
Some considerations of the Finish
system of innovation (Kaitila and
Kotilainen 2005)
Industrial development in Finland can be divided
into three phases:
A factor-driven economy from the mid 19th century
An investment-driven economy from the end of the
world war 2 to the end of the 1980s
An innovation-driven economy since the late 1990s
Pillars in the economy today:
-Growth in ICT (NOKIA)
-Large and Strong paper industry with process
innovations
Most important activity
• Provision of R&D: In 2003, total
expenditure in Finland was about 3.5 per
cent of GDP.
• Most of business sector R&D takes place
in telecommunication and equipment
industry (53%), followed by metals, and
the chemicals industry.
• Nokia alone stands for about 40 per cent
of the total R&D in Finland.
Propensity to innovate in the NSI
• High performance:
– Radio, TV and communication
– Knowledge intensive business services
– Medical instruments
– Office machines and computers
– Pulp and paper, metals