Regional Innovation Systems approach to regional innovation

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Regional Innovation Systems
approach to regional innovation
Professor Bjørn Asheim, Director,
CIRCLE (Centre for Innovation, Research and Competence in
the Learning Economy), Lund University, Sweden.
Lecture at NORSI PhD course on
‘Innovation Systems, Clusters and Innovation Policy’,
University of Agder, Kristiansand, October 23rd 2012
CIRCLE
Centre for Innovation, Research and
Competence in the Learning Economy
Established 2004 as part of Lund University, the largest and third oldest (1666)
university in the Nordic countries
Multidisciplinary centre of excellence in research on innovation and
entrepreneurship
Long term funding from the Swedish Agency for Innovation Systems VINNOVA,
the Swedish Research Council for Centres of Excellence and Lund University
One of the largest centres in Europe of its kind. Over 50 researchers, 50% nonSwedish)
www.circle.lu.se
Innovation as a progressive force
Productivity growth (process innovation)
 More value added production (product)
 Smarter ways of doing things (organisational)
In a globalising knowledge economy:
 Secure growth (developed economies)
 Promote growth (developing economies)
 Enable growth (less developed economies)
Strategic mechanism for solving societal problems
(growth, poverty, environemtal, ageing)

Innovation as a progressive force


Innovation represent ’the high road strategy’
that is the only long-term, sustainable growth
alternative for developed, high-cost
economies as well as for developing
economies
Innovation is not only R&D in high-tech
industries (linear model), but can take place in
all kinds of economic activities (interactive
process - broad based innovation policy)
Theoretical perspectives: Marx


1.
2.
Marx: Innovation represents the civilisational (i.e.
dynamic/progressive) tendencies of capitalism
Caused by the two main contradictions:
Capital – labour (Nordic trade unions’ wage
demands forcing capitalists to innovate)
Between capitals (high road strategy)
It is not innovation that is the cause of the
economic and financial crisis but lack of control
of the repressive tendencies of capitalism (i.e. its
unregulated development of e.g. the financial
sector – deregulation/liberalisation)
Theoretical perspectives:
Schumpeter


Schumpeter defined innovation as ’new
combinations’ of existing knowledge.
He argued that innovation was the source of
economic and social change. Without such
innovation, resulting from the activities of
entrepreneurial individuals and firms
(contradictions between capitals), society
would be stagnant
Theoretical perspectives:
Innovation systems




OECD work in 1982 (’Science, Technology and
Competitiveness’) developing an alternative to
mainstream, static economic’s view on international
competitiveness as based on ’relative wages’ (i.e. the
’low road’ strategy).
Instead a dynamic perspective on innovation and
learning in the promotion of economic growth with an
active role of government stimulating learning and
innovation was proposed (i.e. the ’high-road’ strategy).
Innovation at the centre of economic growth
IS both selection environments (shaping selection
processes) and sources of new variety creation (shaping
creativity)
Economic performance: Global
competitiveness report
(World Economic Forum)



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



Finland:
Sweden:
Denmark:
Norway:
Spain:
Italy:
Portugal:
Greece:
2005
1
3
4
9
2008
6
4
3
16
2009
6
4
5
14
2010 2011 2012
7
4
3
2
3
4
9
8 12
14
16 15
36
42
49
96
Innovation Systems and R&D
(OECD Science, Technology and Industry Scoreboard 2011)

Promoting Innovation Systems approach:
 Finland: Science and Technology Policy Council (now
renamed as Research and Innovation Council) and
TEKES
 Sweden: VINNOVA (Swedish Governmental Agency for
Innovation Systems)

R&D as share of GDP (2011), Researchers per 1000
 Finland
4.0%
16.6
 Sweden
3.6%
10.5
 Denmark
3.0%
12.3
 Norway:
1.8%
10.1
Origins of the innovation system
approach



Lundvall, Aalborg university: Work during the last part
of 1980s (also with Freeman). Edited book from 1992
on ’National Systems of Innovation: Towards a theory
of innovation and interactive learning’
Nelson, Colombia university. Edited book from 1993
on ’National Innovation Systems: A Comparative
Analysis’
Edquist: Edited book from 1997 on ’Systems of
Innovation: Technologies, Institutions and
Organizations’
Varieties of innovation systems

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’Technological’ systems (Carlsson and Stankiewicz,
1995)
’Sectoral’ systems (Malerba, 1997)
’Regional’ systems (Cooke, 1992; Asheim 1995)
Some of the crucial ideas of the IS concept such as
vertical interaction and innovation as an interactive
process appear in Porter’s cluster concept (1990/98)
and the Triple-Helix model of Etzkowitz and
Leydesdorff (2000)
Complementary perspectives to the NIS approach
Regional Innovation Systems (RIS)
narrowly (I) and broadly (II) defined
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(I) A RIS is constituted by two sub-systems and the
systemic interaction between them (and with non-local
actors and agencies):
The knowledge exploration and diffusing sub-system
(universities, technical colleges, R&D institutes, technology
transfer agencies, business associations and finance
institutions)
The knowledge exploitation sub-system (firms in regional
clusters as well as their support industries (customers and
suppliers))
(II) A wider system of organisations and institutions
supporting learning and innovation, and their interactions
with firms in the region. Integrating innovation policy with
education and labour market policies
What characterises most regions?

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Very few regions are only high-tech regions (Sillicon Valleys)
Often regions have a combination of (few) high-tech (R&D/
science based) companies (SMEs and large firms/MNEs) and a
majority of traditional, medium and low tech SMEs, and large
firms
It seems as SMEs are either innovative (e.g. DBFs) and not
rapidly growing, or rapidly growing but not innovative (e.g. many
service gazelles)
Many regions only have traditonal, low tech SMEs (neither
innovative nor rapidly growing)
Still different types of regions can have the same level of
economic performance
Differentiated knowledge bases

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Knowledge creation and innovation take place in all kind of
industries but is done in different ways, needs different kinds of
knowledge and skills and requires different forms of innovation
support
No type of knowledge should a priory be considered superior with
respect to generating economic growth and innovation
Characterise the nature of the critical knowledge which knowledge
creation and innovation processes in different industries cannot do
without (ontological, generic category)
Distinguish between three different knowledge bases:

a) analytical (science based)

b) synthetic (engineering based)

c) symbolic (art based)
Differentiated knowledge bases: A typology
Analytical
Synthetic
Symbolic
(science based)
(engineering based)
(art based)
Developing new knowledge about natural
systems by applying
scientific laws; know why
Applying or combining
existing knowledge in new
ways; know how
Creating meaning, desire,
aesthetic qualities, affect,
intangibles, symbols, images;
know who
Scientific knowledge,
models, deductive
Problem-solving, custom
production, inductive
Creative process
Collaboration within and
between research units
Interactive learning with
customers and suppliers
Experimentation in studios and
project teams
Strong codified
knowledge content,
highly abstract, universal
Partially codified knowledge,
strong tacit component, more
context-specific
Importance of interpretation,
creativity, cultural knowledge,
sign values, implies strong
context specificity
Meaning relatively
constant between places
Meaning varies substantially
between places
Meaning highly variable
between place, class and
gender
Drug development
Mechanical engineering
Cultural production, design,
brands
Knowledge bases and firms:
illustrating empirical examples
Synthetic
Automotive
Food
Film
Pharmacuticals
Symbolic
Advertisement
Biotechnology
Analytical
Symbolic
RIS TYPOLOGY
Type of
knowledge
Type of RIS
Analytical/
science based
Territorially
embedded
(grassroot RIS)
Synthetic/
engineering based
Symbolic/
art based
IDs in EmiliaRomagna
(machinery)
’Advertising
village’ – Soho
(London)
Networked
(network RIS)
Regional clusters –
Regional clusters –
regional university
regional technical
(wireless in Aalborg) university
(mechanical in
Baden-Württemberg)
Regionalised
national
(dirigiste RIS)
Science parks/
technopolis
(biotech, IT)
Large industrial
complex
(Norwegian oil and
gas related industry)
Barcelona as the
design city
Different modes of innovation

1.
2.
3.
4.
’How Europe’s Economies Learn. Coordinating Competing
Models’ : Different modes of innovation (Lorenz and Lundvall,
2006)
STI (Science, Technology, Innovation) – analytical
knowledge/basic research (science push/supply driven) and
synthetic knowledge/applied research (market/user driven)
DUI (Doing, Using, Interacting) – Competence building and
organisational innovations – synthetic and symbolic knowledge
(market/user driven)
Combining modes of innovation (STI/DUI) makes firms perform
better (Berg Jensen et al., 2007)
Firms sourcing broadly (both R&D and experience based
knowledge) are the most innovative (Laursen and Salter, 2006)
How to understand regional
competitiveness?


1.
2.
Regional dimension: Heterogeniety, contingent factors (e.g.
historical, cultural, social, economic, environmental) important
): Diversity and variety
Competition: Based on unique capabilities and competences
Existing competitiveness: growing of existing industries
(incremental (process) innovations in existing technological
trajectories securing high productivity) – path extension (positive
lock-ins)
Future competitiveness:
- evolutionary dimension: upgrading existing industries
(changing technological trajectories through regional branching)
– path renewal
- institutional dimension: promoting new emerging industries
(radical (product) innovations) – path creation
What is Constructing Regional
Advantage (CRA)




New regional development strategy promoting competitiveness
on individual and systems levels to meet challenges of the
globalising knowledge economy
Building on the IS approach on how to increase competitiveness
but advocating a more pro-active and collaborative approach and
including the meso (firm) and micro (entrepreneurs and work
organisation) levels in addition to the system/macro level
Addressing system failures of weak connectivity and lack of
transformative capacity within and between (regional) innovation
systems
Support openness and diversity of IS (differentiated knowledge
bases/related variety/cognitive distance) in the promotion of
platform based strategies of regional development
Definition of Constructing
Regional Advantage

1.
2.
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

Constructing Regional Advantage means:
turning comparative advantage into – or
creating
competitive advantage through an explicit policy push
promoting a Chamberlinian monopolistic competition
based on product differentiation resulting in unique assets
or products
Report from DG Research, European Commission, May
2006
Basic assumption also in the innovation systems and
Porter’s cluster approaches
Strenghtening innovation systems policies
Distributed knowledge networks

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At present, the awereness and importance of implementing
strategies for external knowledge sourcing is increasing, linked to
the challenges and opportunities of global innovation networks
Concepts such as open innovation and innovation systems build
on the recognition that interorganisational linkages are critical to
the innovative capabilities of firms and the growth of economies
As a result of the increasing complexity and diversity of
knowledge creation and innovation processes, firms need to
access and acquire new, external knowledge to supplement their
internal, core knowledge base(s)
Transition from internal knowledge base(s) within firms to
distributed knowledge networks across a range of firms,
industries and sectors locally and globally
Global open innovation

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Evolutionary theory suggests the broader and more diverse the
knowledge bases, the larger the scope for innovation
In most economies the most important source of variety in
knowledge bases is found abroad
The ability of entrepreneurs and firms of a region to tap into
global networks of knowledge and use it productively (open
innovation) will in many cases be more important than the
creation of new knowledge at home
The global dimension of distributed knowledge networks has
increased dramatically in importance over the last decade
In sum, all this implies that territorial innovation systems are
’forced open’, that they can no longer be built solely as sets of
user-producer relationships and that an excessive, singular focus
on localised learning from the policy system may be harmful
Knowledge bases and proximity
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The absorptive capacity for accessing, diffusing and making use
of new external and internal knowledge is unenven due to the
heterogeniety of firms’ competence bases and the importance of
their position in internal and external innovation networks
Proximity dependent on the knowledge bases of firms
Analytical knowledge based firms (e.g. biotech) are part of a
local node of excellence in global knowledge networks and
epistemic communities - less sensitive to proximity – codified
knowledge
Synthetic and symoblic knowledge based firms are more
dependent on local knowledge networks and communities of
practice - distance matters more – context dependent – higher
content of tacit knowledge
For all knowledge bases: Early phasis of innovation facitlitated
by F-2-F interaction
Figure: Knowledge sourcing through
collaboration in
life science
Source: Martin & Moodysson 2012
Figure: Knowledge sourcing through
collaboration in
food
Source: Martin & Moodysson 2012
Figure: Knowledge sourcing through
collaboration in
new media
Source: Martin & Moodysson 2012
Regional innovation policies: A
classification of policy instruments
Support: Financial
and technical
Behavioural
change: Learning
to innovate
Financial support
Mobility schemes
Firm-focused
Brokers
Technology
System-focused
centres
Clusters
Regional
innovation
systems
Clusters and Regional Innovation
Systems (RIS)



Regional Innovation Systems support several clusters
The traditional constellation of regional clusters
surrounded by innovation promoting organisations
(universities, development agencies) in a RIS is
normally found in contexts of industries with a
synthetic (and symbolic) knowledge base(s)
(rationale: to upgrade historical technological
trajectories)
The existence of a RIS as a necessary part of the
development of an emerging regional cluster will
normally be the case of industries based on an
analytical knowledge base (rationale: to support
commercialisation of newly created knowledge)
New regional innovation policy

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Centres of Expertise – focused cluster/RIS policy
Cooperation between global competitive firms and
leading research universities
Nordic countries (Finland, Sweden, Norway)
Upgrading of existing industries and regional
branching based on related variety (i.e. industries with
the same and/or complementary competences and
knowledge bases)
Evolutionary perspective – path renewal through
changing technological trajectories
Institutional perspective – new path creation based on
emerging, knowledge based spin-offs (Sweden –
university driven (exploration)
The concept – Strong R&I milieus


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1.
2.
3.
Strong R&I milieus is a VINNOVA ’invention’ – not used
internationally – shows VINNOVA’s innovativeness with respect to
policy initiatives (e.g. VINNVÄXT)
Centres of Excellence; Centres of Expertise; Technopoles; Science
Parks; Clusters (Technology clusters); Poles de Competitivite, RIS
Builds on and inspired by:
(Regional) innovation systems – innovativess and
competitiveness can be promoted through policy push. Strong
R&I milieus a ’sharpening’ of (R)IS – stronger focus on knowledge
creation – university driven (exploration)
Triple Helix – university, industry, (regional) government –
normative (regional) innovation policy approach
Mode 2 – interdisciplinary, problem-oriented, application driven
research at universities
31
Proximity and the global – local nexus:
Swedish regional innovation policies


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
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Strong Research and Innovation milieus – strengthening of RIS
approach (a narrow based innovation policy)
Sweden – VINNOVA’s regional innovation policy approach.
Spatial agglomerations but with an explicit reference to the
importance of links to global knowledge networks – open
innovation
Emphasizing proximity (not only spatial but also organisational)
between knowledge exploration and exploitation
’Strong’ emphasises of global excellence in knowledge
exploration as well as in knowledge exploitation
Institutional perspective (policy push/Triple Helix) promoting
innovation (10 years/matching funding)
Top-down/bottom-up strategy
Roles of universities in RIS:




Third mission (after teaching and research): direct
interaction between universities and society as key actor in
the knowledge exploration subsystem of RIS
 Creating high-tech firms
 Consulting for local industry
 Delivering advice for politicians
 Informing general public debates
Universities are increasingly of strategic importance for
regional development in the knowledge economy by often
being the only actor bringing global state-of-the-art science
and technology into the region
Generative role: discrete outputs in response to specific
demands
Developmental outputs: development of regional
institutional capacities (e.g. in the context of RIS)
VINNOVA - Strong R&I milieus
Regional innovation
systems
• Policy to boost innovativess and competitiveness
• Strong R&I milieus, focus on knowledge creation
Triple Helix
• University – industry – government
• Normative (regional) innovation policy approach
Mode 2
• Interdisciplinary, problem-oriented, application
driven research
Regional Proximity/
Globally connected
• Spatial and organisational
• Global knowledge networks (open innovation)
Emphasis on global
excellence
• In knowledge exploration & exploitation
34
Requirements for a successful
Triple Helix collaboration
Geography
dimension
Institutional
dimension:
policy & funding
Organisational
dimension
• Proximities at the regional level
• Spatial distribution of strong HEIs
•
•
•
•
Third mission
Triple Helix policy framework
Research funding promoting Mode 2
University autonomy
• internal organisation of universities
Geography dimension - regional
concentration of R&D activity
Share of national investment
EUR per capita
NORWAY Capital
Trondheim
45
17
1 956
1 964
SWEDEN
Capital
Gothenburg
Lund
Linköping
33
22.5
16.5
18
1 768
1 273
1 278
1 216
FINLAND
Capital
Tampere/Åbo
Oulu
56
23.5
16.5
1 431
1 179
1 761
63
2 597
DENMARK Capital
Why a broad based innovation
policy?

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


Is more R&D driven innovation policies always the only
answer to improving regional innovativeness and
competitiveness? Hardly, as
Regions’ industrial structure are heterogenous, where a one
dimensional R&D (S&T) based policy will not work. A fine
tuned regional innovation policy is needed (Constructing
Regional Adventage)
Many drivers of innovation (supply, demand, market,
employee driven)
Many types of innovation (radical vs incremental; product,
process, organisational)
Many regions and nations starting to have a stronger focus on
this problematic. Thus, the idea of a broad based innovation
policy get increasingly more support
Needs both narrow and broad RIS to be implemented
combining the STI and DUI modes of innovation
The combination of STI and DUI
modes of innovation

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

Cognitive distance has to be reduced and absorptive
capacity increased to achieve such a combination
(especially for traditional SMEs)
The STI mode includes both synthetic and symbolic
knowledge bases, and the DUI mode is also present
in firms based on the STI mode. This represent
bridging mechanism reducing the cognitive distance
Internal competence building through developmental
learning in learning work organisations and
organisational changes increase absorptive capacity
Needs both narrow and broad RIS to be implemented
VRI – a Norwegian innovative
regional policy program: A broad
based policy

1.
2.
3.
4.
Anticipated later theoretical developments:
DUI mode of innovation with learning work organisations
as the micro foundation
Combining DUI and STI – later research has shown that
firm sourcing broadly for knowledge for innovation are
more innovative – Triple Helix on regional level
Combining research with action research by creating
regional learning arenas in the form of regional
partnerships (regional development coaltions = learning
regions)
Norway had a broad based innovation policy on the
regional level 3-4 years before Finland introduced such a
policy on the national level
Forms of work organisation across European
nations (micro foundation of the DUI mode of
innovation)

‘Learning’ forms of work organisation (CME):



‘Lean’ forms of work organisation:



+ : UK, Ireland, Spain and France
- : Netherlands, Denmark, Sweden, Germany and Austria
‘Taylorist’ forms of work organisation:



+ : Netherlands, Denmark, Sweden and Norway
- : Southern countries and Ireland
+ : Southern countries and Ireland
- : Netherlands, Denmark and Sweden
‘Simple’ forms of work organisation:


+ : Southern countries
- : Netherlands, Denmark, Finland and UK
The forms of work organisation in the EU

Learning forms of work organisation: (39.1%)



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


autonomy in work
learning dynamics (learning new things, problem solving)
complexity of tasks
responsibility for quality control
low work rate constraints, repetitiveness and monotony
team working and job rotation not characteristic
• “Swedish socio-technical” model
• “American team working” model (Appelbaum et Batt)
Lean forms of work organisation: (28.2%)






team working
job rotation
quality management (quality norms and quality control)
learning dynamics
work rate constraints, repetitiveness and monotony
relatively low autonomy in work
• “Lean production” (Womack et alii; MacDuffie et alii)
• “Controlled autonomy” model (Appay; Coutrot)
.8
NL
SE
.7
DK
DE
AT
LU
FI
.6
BE
.5
FR
.4
UK
150
200
250
EPO Patents
300
350
.8
NL
SE
Learning/ Learning + Lean
.5
.6
.7
DK
DE
AT
LU
FI
BE
FR
.4
UK
0
50
100
EPO High Tech Patents
150
Interactive learning in learning
work organisations
The Norwegian ’puzzle’



Norwegian ’puzzle’ (OECD): High welfare and per
capita income levels, one of the highest GDP
globally, and strong performance with respect to
productivity in combination with a very low level of
investment in R&D (also when controlled for
industry structure)
Focus on incremental process innovations in
resource based industries (metal, oil and gas)
High level of absorptive capacity due to one of the
highest levels of tertiary education in Europe
The Norwegian ’puzzle’


The high level of absorptive capacity results in
a high level of adoption of new technologies,
efficient knowledge diffusion and frequent
cooperation in innovation
However, such characteristics of a national
innovation system is ’typically not captured by
conventional indicators of innovation input or
output’ (Fagerberg et al. 2009a)
Norwegian oil and gas industry


Even if around 30% of all firms in (a wider
defined) oil and gas industry use 4 percent or
more on R&D (however, big variations between
the subsectors in the industry) ’most past
innovations were driven by the close cooperation
between operators and suppliers in the
development of large fields’ (Sasson and
Blomgren, 2011)
This type of innovations as a result of practical
challenges related to field development is typical
examples of application development
Modes of innovation –
technological and application
development

1.
2.
Two modes of innovation (synthetic knowledge based,
engineering industries with batch production):
Application development. Incremental innovations
through user-producer relationships with demanding
customers and suppliers in connection with the actual
production. In-house experience based competence
dependent on a highly qualified workforce. D(oing),
U(sing), I(nteracting) mode of innovation
Technological development. Research projects together
with universities to develop platform technologies as the
basis for application development. S(cience),
T(echnology), I(nnovation) mode of innovation
Innovation indicators and
measurement



However, many such innovations, which ’relied on well-developed
engineering competence and highly competent labor, ...., may not
even be classified as innovations by CIS (community innovation
study)-type surveys that mainly focus on product and process
innovations’ (Fagerberg et al., 2009a)
This implies that ’learning-by-doing and engineering based activities
such as the design of large process plants in oil refining or basic
metals are not captured by the Frascati mmanual of definitions of
R&D and may not be captured by the design category in the CIS
expenditures question’ (Fagerberg et al. 2009b)
This measurement problem together with the importance of learning
work organisation as the micro foundation of the DUI mode of
innovation may well be able to explain why the Norwegian ’puzzle’ is
not a ’puzzle’ after all
The Learning Region: Foundations,
State of the Art, Future
Ed by Rutten & Boekma, Elgar 2007





Foundations:
Storper: Regional ’worlds’ of production
(1993)
Florida: Toward the learning region (1995)
Asheim: Industrial districts as ’learning
regions’ (1996)
Morgan: The learning region: institutions,
innovation and regional renewal (1997)
What is a ’learning region’?

1.
2.
3.
The building blocks of the concept:
Learning regions as regional clusters/ industrial
districts characterised by broad co-operation and
collective learning (Asheim/Third Italy)
Post-fordist economies as ’learning economies’
where innovation is understood as interactive
learning (Lundvall/Denmark)
Learning regions as ’regional development
coalitions’: a bottom-up strategy based on broad
participation starting with work organisations
(Gustavsen/Nordic countries)
The origins of the concept I





Research on localised learning and the role of
cooperation in industrial districts (ID) (Asheim, 2006).
Important ’heritage’: ’Fusion’ of economy and society
(Piore and Sabel, 1984)
Key ’addition’ (to ID research): Emphasizing the
limitations of the vertical dimension of a cluster for
innovation, and the need of promoting horizontal
cooperation for the districts to become more
innovative.
Requires organizational and institutional upgrading
Anticipate: A broad definition of RIS
The origins of the concept II




Learning economy approach (Lundvall and Johnson,
1994)
Important ’heritage’: Innovation seen as a socially and
territorially embedded, interactive learning process,
pointing at knowledge as the most fundamental
resource and learning the most important process
Key ’addition’ (to ID research): Making Third Italy’s ID
not an exception ’for the time being’ but a territorial
based development model
Anticipate: The DUI (Doing-Using-Interacting) mode of
innovation (Lorenz and Lundvall, 2006)
The origins of the concept III




Regional development coalitions (Ennals and
Gustavsen, 1999)
Important ’heritage’: Emphasizing the importance of
work organisations and competence building for firms
and regions competitiveness
Key ’addition’ (to ID resarch): Action-oriented
organizational research adding to the change
potential of the approach as a territorial development
model applying a broad definition of RIS
Anticipate: The importance of (learning) work
organizations (Lorenz and Lundvall, 2006),
developmental learning (Lorenz, 2012) and
organizational innovations
Growth paradigms and transformation of RIS.
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