Norwegian innovation policy in a path
dependence/path creation perspective
NORSI course on
Innovation Systems, Clusters and Innovation Policy
October 25, 2012
Olav R. Spilling
Norwegian innovation policy in a path dependence
and path creation perspective
Part I:
1. Brief on the Norwegian Innovation Policy and its context
2. Path dependence
3. Path evolution and path creation
4. Path dependence and innovation policy
5. The Norwegian innovation policy approach
6. Some preliminary assessments
Part II:
Path evolution: The case of a national programme for
stimulating the development og regional clusters
Objective:
Analyse the Norwegian innovation policy approach with a
particular focus on
- path dependence and path creation
- related variety
- strategies for searching new policy options.
Innovation policy
Innovation policy
Public interventions which influence innovation activities in society
European Commission 1997:
… innovation policy refers to elements of science, technology and industrial
policy that explicitly aim at promoting the development, spread and efficient
use of new products, services and processes in markets or inside private and
public organisations.
 Focus on the impact on economic performance and social cohesion
 Innovation policy has wider objectives than those of science policy and
technology policy
 Innovation policy includes policies which aim at organisational change
and the marketing of new products.
Source:
European Commission (1997). The globalising learning economy:
Implications for innovation policy.
The rationale of innovation policy
System failure or systemic problems
Edquist and Hommen 2006:
… researchers following a systemic approach often speak of systemic problems. In
contrast to the conventional approach outlined above, the main focus of the systemic
approach is the complex interactions that take place among the different organisations
and institutions that constitute the system of innovation. From this perspective, policy
makers need to intervene in those areas where the system is not functioning well. The
rationale for innovation policy should therefore be based on 'systemic' failures or
problems rather than on 'market' failures.
Edquist, C. and L. Hommen (2006). Comparing National Systems of
Innovation in Asia and Europe: Growth, Globalisation, Change and Policy.
Brief on Norwegian innovation policy
Innovation policy has generally been low on the agenda
The first systematic initiatives for developing innovation policy
were taken during the early 2000s:
• The Government’s Action Plan for innovation policy (2003)
• The White Paper on innovation 2008-2009 (St.meld 7, 20082009)
Innovation policy is a complicated
field
• Many ministries are involved
• A number of policy documents
are relevant
Criticism of the Norwegian approach
• Lack of visions on the long term
development
• Fragmented approaches
• Missing a coordinating body
The White Paper on Innovation Policy (St.meld. Nr 7,
2008-2009)
Action points:
The Government’s innovation policy shall stimulate
sustainable value creation in the Norwegian economy by
stimulating and facilitating:
1.
Innovation in SMEs
2.
Culture for entrepreneurship
3.
Employee-driven innovation
4.
Innovation in the public sector
5.
Industrial R&D
6.
Commercialisation of business ideas (in HEIs)
7.
Environmental technology
8.
IPR
9.
Policy measures for innovation
10.
Design as a tool for innovation
11.
Innovation in services
12.
Further development of the innovation policy
approach
Background and issues
• Norway one of the world’s most successful states in terms of
economic performance, welfare and egalitarian structure
• Strongly dependent on natural resources (hydroelectric power,
marine resources, oil and gas) – very successful industrial
development in these sectors
• Norway’s high performance in these areas due to a successful
policy approach
• Relatively low performance in other strategic areas, e.g. “high
tech” industries
• To what extent represent these strengths negative lock-ins?
• To what extent is it necessary to create new paths for industrial
development?
• To what extent are these issues addressed in the Norwegian
innovation policy approach (explicit or implicit)
Issues
Characteristics of Norwegian industries:
•
•
Low investments in R&D (as % of GDP, but high per capita)
Low level of innovation activity, and declining innovation activity
during the 2000s (ranking no 16 on EIS)
Issue:
•
To what extent is there a need for transformation to industries with
a higher level of R&D investments and higher level of innovation
activity?
The national innovation policy approach:
•
•
•
Broad-based, less explicit
Oil and gas policy not integrated in innovation policy
Lack of visions regarding what may be the main future industrial bases
as the petro-based activities some time in the future are scaling down
Issue:
• Is the current policy approach adequate in terms of:
- addressing future challenges?
- searching new opportunities?
- facilitating the exploitation of these opportunities?
Path dependence
Path dependence explains how the set of decisions one
faces for any given circumstance is limited by the
decisions one has made in the past, even though past
circumstances may no longer be relevant.
(The free Encyclopedia)
Martin & Sunley
“A path-dependent process or system is one whose outcome
evolves as a consequence of the process’s own history”
General interpretation:
Path-dependence means that all processes of evolution in
an area depend on the existing industrial structure,
entrepreneurial culture, social structure, institutional
structure etc.
Lock-in
Positive and
negative lock-in:
Types of lock-in:
• Technological
• Competence/Knowledge bases
• Institutional (formal)
• Cultural/Social
Path dependence
Evolutionary processes:
Variety creation – adaptation – selection - retention
The geographic area (the system) represents
• Windows of opportunities
• Selection environment
Fagerberg et al 2009:
“At any point in time many new ideas emerge, but only those that
are well adapted to the contemporary selection environment are
likely to be applied and form the basis for continuing adaptation
and improvement.” (p 432)
“The national innovation system is also the selection environment
for new entrepreneurial ventures, and path dependency influences
these selection processes. New ventures that have little in common
with economically strong existing sectors may find the national
innovation system is poorly adapted to their needs.” (p.433)
Path dependence and related variety
Purposeful entrepreneurial deviation:
• New ventures are often spin-offs from other firms or in other
ways related to the existing industrial structure
• Entrepreneurs transfer technology, competence etc from
“parent firms” to their new ventures
• New firms in the same or related sectors seems to be most
successful
• When spin-offs enter a new, but related sector, this may lead
to path dependent path creation
Entrepreneurial opportunities:
• Not exogenously given, but are deliberately made
• Based on the entrepreneurs’ interpretation
• Depends heavily on prior experience and learning
(Based on Martin and Sunley 2010 p.30-31)
The most important aspect of path dependence may be the
existing entrepreneurial climate resulting from pre-existing
conditions (Carlsson 2007)
Path evolution and path creation
Martin, R. & P. Sunley (2010): The Place of Path Dependence in an Evolutionary Perspective
on the Economic Landscape. In Boschma, R. & R. Martin (Eds) Handbook of Evolutionary
Economic Geography, Chichester: Edward Elgar
Path evolution and path creation
Martin&Sunley 2010
Path creation
Path and place
effects
Origin of new path
Delibarate and
intentional
Chance and accidental
Enabling new
paths
1. Agents search for
opportunities, re-use
resources, transfer
competences as basis for
new growth
2. Agents gain assets and
experience, but accidents
and events trigger new
path
Constraining to
existing path
3. Designed interventions
to break path or switch
location to overcome
lock-in
4. Unpredictable external
shocks and random events
break old trajectory and
launch new path
• Classic view on path dependence rooted in box 4
• More recent work in economic geography has adopted
positions in boxes 2 and 1 and has put much more emphasis
on the re-use and transfer of resources and competences
Source: Martin & Sunley 2010
Path dependence in Norway
Benner (2003): The Scandinavian challenge.
• The Norwegian economy is still based on relatively low-technology
sectors, where radical innovations or major technological discontinuities
are rare …
• Norway seems stuck in its traditional growth paradigm
• The question … is how a new growth model can be supported, and how
the government can promote the rise of knowledge-based industrial
sectors
• The Norwegian development is similar to the Swedish one. With no
immediate pressure for a structural transformation of the economy in the
presence of the rich oil supplies, the institutional adjustments have been
relatively weak, and there is no real socio-political backing of a radically
new growth strategy as a response to the challenges of the knowledgebased economy.
Fagerberg et al 2009:
The historical development of Norway’s national innovation system is
characterized by strong path dependency. The Norwegian innovation
system has been dominated by resource-based innovation. The
development of new industries that are less closely linked to natural
resources, in spite of considerable support from public policy, has been
relatively unsuccessful in Norway.
Finland: From path dependency to path creation
Schienstock (2007):
• The development of a new techno-organizational path and its
embedding into a new institutional and cultural setting cannot be
understood as a sudden break from the old path. Instead, the new
path is often emerging gradually, side by side with the old path (p96)
The competitiveness of the Finnish ICT cluster due to several factors:
• Corporate specialisation
• The core company as a key global player
• Network of SMEs closely cooperating
• High R&D investments and close science-industry cooperation
• Highly educated workforce
• Focus on firm-centred innovation policy
Institutional adaptation
• The educational system
• The financial system - foreign capital
• Venture capital
• Changed policy orientation from an investment-oriented, short-term
macroeconomic policy into an innovation-oriented, long-term
microeconomic policy
Transformation of regional innovation systems
Tödtling and Trippl 2011/Asheim et al 2012
Three ways of RIS-transformation (Path evolution):
1. Path extension
- changes within existing industries og clusters
- modify the existing trajectory, but does not alter it
- modest changes in the knowledge infrastructure
2. Path renewal
- open up new directions, broadening the economic base
- rise of new clusters (in established industries)
3. Path creation
- growth based on new technological and organisational trajectories
- branching out of existing industries into new but related fields
The importance of the existing RIS:
“Preexisting local economic and technological structures,
knowledges and competencies matter essentially.”
Path dependence and innovation policy
Smits et al 2010:
•
•
An appropriate ‘evolutionary’ targeting perspective should be
developed implying a strong strategic process of selection by
government
It is imperative to assure that sufficient creation of new options and
associated experimentation and learning (‘variation’) take place
before a finalized targeting policy be implemented
Appropriate targeting perspective
Strategic process of selection
Assure sufficient creation of new
options and associated experimentation and learning (variation)
Implementation of finalized
targeting policy
Need for:
•
New arenas of
interaction
•
New mechanisms of
interaction and mutual
adaptation
•
Strategic intelligence
•
Strategic niche
management
Smits, R.E., S. Kuhlmann & M. Teubal (2010) A
system-evolutionary approach for innovation
policy. In Smits et al.
The Norwegian innovation policy approach
The White Paper on Innovation Policy (St.meld. Nr 7, 2008-2009)
Action points:
The Government’s innovation policy shall stimulate sustainable
value creation in the Norwegian economy by stimulating and
facilitating:
1. Innovation in SMEs
2. Culture for entrepreneurship
3. Employee-driven innovation
4. Innovation in the public sector
5. Industrial R&D
6. Commercialisation of business ideas (in HEIs)
7. Environmental technology
8. IPR
9. Policy measures for innovation
10. Design as a tool for innovation
11. Innovation in services
12. Further development of the innovation policy approach
The Norwegian innovation policy approach
Policy field
Measure
Outcome
Ministry
1 Innovation in
SMEs
Strategic advisory council for
SMEs
New strategy for SMEs
(Simplification/less
bureaucracy)
Trade and
Industry
2 Culture for
entrepreneurship
Action plan for
entrepreneurship in education,
particular focus on higher
education
Support for new study
programmes;
All HEIs have to provide
courses in innovation and
entrepreneurship
Resesarch&Edu
Regional Aff.
Trade and Ind.
3 Employee-driven
innovation
Collaboration with the Trade
Union (LO) and the
Confederation of Norwegian
industry (NHO)
‘Handbook’ for best
practice of employeedriven innovation
Trade and
Industry
4 Innovation in
the public sector
Review incentives for innovation
in public sector
Vague strategy
Public procurement?
Trade and Ind.
Governm Adm
Public committee for innovation
in the social care sector
Strategy for the health
care industry, incl.
welfare technology
Health&Care
More focus on demand-driven
innovation in the health care
sector
Extension and
broadening of action plan
Health&Care
The Norwegian innovation policy approach – cont.
Policy field
Measure
Outcome
Ministry
5 Industrial R&D
Strengthen industrial R&D by
- user-oriented research
programmes
- industrial doctorate programme
- study the possibility for
establishing an ocean laboratory
Followed up in various
ways.
New Innovation Strategy
launched by the Research
Council (2011)
Trade and
Industry
6 Commercialisation of
business ideas
Better information about current
measures and consider new
measures
Probably nothing?
Revision of programme for
commercialisation; reduced
budget
Trade and
Industry
7 Environmental
technology
Develop a national strategy and
establish a strategic advisory
council
National strategy for
environmental technology
Trade and
Industry
Enviroment
8 IPR
Initiatives to strengthen protection
of IPR
• Ratification of the European Patent Convention
• Support for a Nordic
Patent Institute
• Others?
Trade and
Industry
The Norwegian innovation policy approach – cont.
Policy field
Measure
Outcome
Ministry
9 Policy instruments
for innovation
Increased budgets for R&D
and innovation;
Evaluation of the two
innovation agencies
Innovation Norway and SIVA
Evaluation of SIVA (2009)
and Innovation Norway
(2009).
White Paper on the future
organisation of the two
agencies (2012)
Trade
and
Industry
10 Design as a tool
for innovation
Programme for design-driven
innovation
New programme for designdriven innovation
established in 2009
Trade
and
Industry
11 Innovation in
services
Dialog with the service
industry organisations to
develop more precise policy
instruments
Established strategic forum
with stake-holder
representatives
Trade
and
Industry
12 Further development of the
innovation policy
approach
Improve the knowledge base
for innovation policy and
establish strategic advisory
councils in specific areas
Organisation of a
consultation strategy
“Norway 2020” with two
groups:
• Business managers and
entrepreneurs
• Specialists on R&D etc.
Trade
and
Industry
Summary
Main
weaknesses
Action
Assessment
1 Innovation in SMEs
OK – Strategy for simplification
2 Culture for entrepreneurship
OK – Systematic work addressing the HEI
3 Employee-driven innovation
OK – Important for development of DUI-based
innovation
4 Innovation in the public sector
X
a. Review incentives for innov.
Vague strategy; less focus on public procurement
b. Innovation in the social care sector
OK – Very goal oriented, potential for new industries
c. More focus on demand-driven
innovation in the health care sector
OK – Very goal oriented, extending on going
programs
X
X
5 Industrial R&D
Status quo – unclear strategy
6 Commercialisation of business ideas
Status quo – unclear strategy, reduced budgets
7 Environmental technology
OK – Very goal oriented, potential for new industrial
development
8 Strengthen protection of IPR
OK
9 Policy instruments for innovation
Status quo – some marginal improvements
10 Design
OK
11 Innovation in services
OK – but no outcome beyond a “handbook”
12 Further development of the innovation
policy approach
a. The knowledge basis
b. Strategic advisory body
Weak, fragmented strategy for knowledge developm
Norway 2020 – primarily symbolic action
X
Not integrated (or marginally integrated)
in the national innovation policy
Policy fields not included in innovation policy (or just marginally
mentioned):
• Oil and gas (just marginally mentioned in the white paper)
Most important sector in Norway – data for 2010:
-
21%
24%
26%
47%
of
of
of
of
GDP
State revenues
all investments
all export
• Renewable energy (hydroelectric power, wind onshore and
offshore, bioenergy, solar energy)
(Significant activities funded by the Research Council)
• CCS (Carbon Capture Storage) – large scale technology
projects in progress, long way to go to industrialize
Summary the Norwegian
innovation policy approach
Policy field
General
framework
conditions
Potential for
‘new’
industrial
development
Comments
1 Innovation in SMEs
X
2 Culture for entrepreneurship
X
3 Employee-driven innovation
X
4 Innovation in the public sector
X
5 Industrial R&D
?
Vague strategy
6 Commercialisation of business ideas
?
Vague strategy
7 Environmental technology
XX
XX
Probably huge
potential
Probably huge
potential
8 IPR
X
9 Policy instruments for innovation
X
10 Design as a tool for innovation
X
11 Innovation in services
?
Vague strategy –
less adequate?
12 Further development of the
innovation policy approach
?
Very open
Sector specific strategies – preliminary assessments
Policy field
Path
extent.
Path
renew.
Path
creat.
- eGovernance
X
(X)
- Health care technology
X
X
- Medical technology
X
X
Environmental technology
X
Innovation in the public sector
Potentially new industry
Potentially huge potential
Renewable energy
- Solar energy
X
New industry, but threatened due to
international market conditions
- Wind energy (on- and
offshore)
X
Huge potential
- Bioenergy
X
Medium potential
Maritime industries
X
X
X
X
X
X
X
National industries playing a leading
role internationally
Marine industries
-
Fish farming
Marine biotech-related
Petroleum industries
Carbon Capture Storage
(CCS)
x
Probably limited potential in marine
biotech-related industries due to weak
industrial structure
Huge potential, also in related
industries
X
Huge investments, unclear short term
industrial potential
Conclusion I
• The perspectives of Path Dependence and Path Creation provide
a useful theoretical basis for discussing the Innovation Policy
approach
Further work required to develop the framework.
Preliminary conclusion regarding the Norwegian innovation policy
approach:
• Still not a very distinct and proactive policy approach
• Missing perspectives regarding the balance between the oil
economy and other sectors
• In some areas the Government pursues a very systematic
strategy for searching and identifying new policy options (e.g.
environmental technology, health care services)
• Some areas less developed (e.g. public procurement)
• Important sectors not integrated in innovation policy (e.g. oil
and gas, renewable energy)
Conclusion II
Innovation policy as a strategy for searching new policy
options:
The principal policy level
• Norway 2020 – Primarily symbolic
The sectoral level
• Innovation in the health care industry – Adequate strategy
• Environmental technology –
Adequate strategy
• Innovation in services –
Adequate strategy
• The CCS Strategy –
Failure
The regional level:
• The Arena-programme
• The VRI-programme (Policy measures for regional R&D and
innovation)
Selected references
Benner, M. (2003) The Scandinavian challenge. The future of advanced
welfare states in the knowledge economy. Acta Sociologica, 46, 132149.
Fagerberg, J., D.C. Mowery & B. Verspagen (2009) The evolution of
Norway’s national innovation system. MPRA Paper No 19330
Martin, R. & P. Sunley (2006) Path dependence and regional economic
evolution. Journal of Economic Geography vol 6 (2006) 395-437
Martin, R. & P. Sunley (2010): The Place of Path Dependence in an
Evolutionary Perspective on the Economic Landscape. In Boschma, R.
& R. Martin (Eds) Handbook of Evolutionary Economic Geography,
Chichester: Edward Elgar
Smits, R.E., S. Kuhlmann & M. Teubal (2010) A system-evolutionary
approach for innovation policy. In Smits, R.E., S. Kulhmsnn & P.
Shapira (Eds) The theory and practice of innovation policy.
Cheltenham UK: Edward Elgar 417-448
Schienstock, G. (2007) From path dependency to path creation: Finland
on its way to the knowledge-based economy. Current Sociology, 55
(1): 92-109
Tödtling, F. & M. Trippl (2011) Transformation of regional innovation
systems: From old legacies to new development paths. Paper at
Colloquium in Cardiff, April 4-5, 2011
Appendix
Action points in the English version of the White
Paper on Innovation Policy – “An Innovative and
Sustainable Norway”
The Norwegian IP approach – the English version
An Innovative and Sustainable Norway
Knowledge and Competence
-
-
White paper on teachers role and
education
White paper on internationalisation of
education
Follow-up the Government’s strategy
for promoting mathematics, science
and technology
Review how the education sector and
working life are working together, and
consider various strategies to
strengthen this field
White Paper on the structure of the
education system with a view to
future competence needs
Advance a mentality encouraging
entrepreneurship, including an action
plan on entrepreneurship in
education, with particular emphasis
regarding higher education.
Innovative undertakings
-
-
-
Strengthen the instruments for innovation, among other ways, by increasing
allocations to research and innovation and
by initiating overall evaluations of Innovation Norway and the Industrial Development Corporation of Norway (SIVA )
Ensure that the values created are well
protected, among other ways, by providing a package of measures for patents
and other rights with an improved training
provision and a more up-to-date statutory
framework
Strengthen the use of design as an
innovation tool by setting up a designdriven innovation programme
Focus on the employees, and consider
new measures for promoting staff-driven
innovation in collaboration with the
Norwegian Confederation of Trade Unions
and the Confederation of Norwegian
Business and Industry
An Innovative and Sustainable Norway – cont.
Focus on Doing What We Are Good At
-
Start-up and Growth
-
-
Develop an overall industrial strategy
for small and medium-sized
enterprises
Elucidate the need for new measures
to support female entrepreneurs, and
consider how better provisions can be
made to realise the good ideas of
people with long experience
Establish favourable conditions for
commercialising good business ideas
through better information about
current policy instruments, and
assess new policy instruments
-
-
-
Focus on environmentally friendly innovations, among other ways, by allocating more
research funds to development of
environmental technology, by setting up a
strategy council for environmental technology and by preparing a national strategy
for environmental technology
Invite the organisations in service industries
to a dialogue with a view to developing
precise policy instruments for increased
innovation in these areas
Follow up investments in the High North
strategy and present a national strategy for
marine bioprospecting
Present an overall strategy for marine
industries
Follow up the national strategy for the
tourism industry
Follow up the national strategy for the
maritime industries
Continue efforts on encouraging further
industrial development based on our
abundant energy resources
Participate in investigations of the potential
for a future-oriented ocean laboratory
An Innovative and Sustainable Norway – cont.
Research and Development
-
-
-
-
Strengthen research in industry by
increasing allocations to user-oriented
research programmes and to R&D
contracts
Continue the Skattefunn tax relief
scheme
Contribute to improved interaction
between industry and research by
strengthening the industrial
doctorates system and efforts related
to commercialisation of research
results
Establish favourable conditions for
long-term knowledge building, and
increase investments in research
equipment
Strengthen regional research
activities by allocating NOK 6 billion
to regional research funds
Submit a white paper on research to
the Storting
Innovation in the Public Sector
-
-
Review incentives for renewal of the public sector
Appoint a public committee to propose how to
make better conditions for innovation in the social
care sector
Extend the duration of the demand-driven
innovation and business development in the
health sector to ten years, and also extend it to
include research-based innovation
Involve the users in the development of services
through national surveys and measurements of
performance achievement
Establish favourable conditions for wealth creation
based on sound solutions in the public sector and
increased use of public data
Strengthen the municipal sector as a service
provider
Increase competency on how public procurements
can contribute to innovation and simplify the use
of R&D contracts for public procurers
Simplify interaction with the public sector and
ensure greater use of innovative solutions, among
other things, electronic signatures
Strengthen the public R&D contract scheme, with
a particular focus on the promotion of innovation
in the social care sector
Aim at strengthening clinical testing units for trial
of new medicines