Promoting innovation systems as a
response to the globalising learning
economy
Second draft of Contribution to the project Local Productive Clusters and Innovations
Systems in Brazil: New industrial and technological policies
Björn Johnson and Bengt-Åke Lundvall, Aalborg University
June 1, 2000
(Synopsis title: Policies to promote national systems of innovation in the knowledge
economy)
Introduction
Taking the most recent World Development Reports as our starting points, we show
how the task of designing and implementing development strategies has, become even
more demanding and complex than it was 10 years ago. In spite of the apparent success
of ‘the new economy’ in the US and of the increasing predominance of finance capital
at the global level, there is, according to these reports, no more a Washington consensus
on one ‘best-practise’ strategy for developing countries. It is increasingly realised that
there is a new kind of competition where competence building and innovation has
become important for all players in the global markets and this challenges both old
forms of state intervention and neo-liberal dogma. In the new context institutional
learning and social capital tend to become key elements in development strategies.
At the same time, the globalisation process and the political discourse connected to it
increase the pressure on low income countries to take the the ecological and social
dimensions of national development strategies seriously. We propose that, in order to
cope with this ‘globalising learning economy’ where the transformation pressure is
increasing while, at the same time, ambitions are broadened to take sustainability into
account, the concept of innovation systems is helpful both as an analytical tool and as a
guide for policy making. We point to the need to integrate different policies related to
competence building and innovation both at the national and the regional level and to
rethink them so that they promote sustainable systems of competence building and
innovation. But even with well designed national policies the global context will
impose instability and crises in the economy. We end up with discussing some of the
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fundamental inherent contradictions in the globalising learning economy that call for
institutional reform at the global level.
A new and more complex agenda for economic development
The end of Washington Consensus
According to the most recent World Development Reports there is no longer a
Washington Consensus on concrete development policies. The Washington Consensus
was a highly market-oriented view on development, which emerged in the 1980's and
was reflected in the policy recommendations of international organisations such as
OECD, IMF and the World Bank. The emphasis was on macroeconomic balance and
‘getting prices right’. In the words of former World Bank chief economist Joseph
Stiglitz, the advice was to "…keep inflation to a moderate level, limit the size of the
fiscal deficit, avoid introducing large distortions in the economy, open the economy to
foreign competition…" (Stiglitz, 1998, p.28).
The Washington Consensus tried to define a "best practice" development strategy; a
strategy with a supposedly very wide – if not completely general - range of
applicability. It has now been recognised that such a best practice does not exist.
Macroeconomic balance is still regarded as a necessary part of an effective development
strategy, but it is now emphasized that it has to be complemented with institutional
innovations: "But an essential part of the new development strategies involves the
creation of institutions and the changing of cultures – the movement to a culture of
change and science, where existing practices are questioned and alternatives constantly
explored" (Stiglitz, 1998, p. 29). Since it is impossible to define an optimal institutional
set-up, it also becomes futile to search for one best practice in development strategies.
The more institutions and knowledge and the relations between them are emphasised,
the more obvious it becomes that there are different development roads and that each
country, at least to some extent, has to develop its own strategy.
The focus is also increasingly put on how the different development factors interact and
feed upon each other. Investment in physical capital, natural capital or knowledge
capital can not alone explain development. And when it comes to policy making, it is
no longer considered to be a good idea to concentrate exclusively on one key factor.
There is an increasing recognition of a need to combine several different kinds of policy
when formulating development strategies at the national level.
The new emphasis on knowledge and institutions
Another important basic assumption originating from standard economic models, now
challenged, has been that information and knowledge float more or less freely between
countries. That the costs in this connection are low and presently further reduced by
information technologies and the internet is an idea, which still seems to have some
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prevalence both among policy makers and in academia. This reflects the view among
economists that it is legitimate to reduce knowledge to information.
The learning economy is not a high technology economy
One way of characterising the new context of intense competition and rapid change is to define it as ‘a
learning economy’ (Lundvall&Johnson, 1994; Lundvall, 1996). The main reason why learning has
become more important is the dialectics between learning and change. Rapid change implies a need for
rapid learning, and those involved in rapid learning impose change on the environment and on other
people.
Simply defined, a learning economy is an economy where the ability to learn is crucial for the economic
success of individuals, firms, regions and national economies. “Learning” refers to building new
competencies and establishing new skills and not just to “getting access to information”. (OECD 2000).
It should be obvious, from what has been said so far, that the learning economy is not necessarily a Hitech economy. Learning is an activity which takes place in all parts of the economy, including so-called
low-tech and traditional sectors. Low income countries and regions are as strongly affected by the
learning economy and experience the need for competence building even more strongly than the
metropoles.
One alternative concept to 'the learning economy' is 'the knowledge-based economy' (OECD, 1996). The
most fundamental reason for preferring 'the learning economy' as the key concept is that it emphasises the
high rate of economic, social and technical change that continuously underlies the formation and
destruction of specialised knowledge. It makes it clear that what really matters for economic performance
is the ability to learn (and forget) rather than the stock of knowledge.
Lately, however things have changed also in this respect. It is now increasingly
recognized that both the role of knowledge and the problems of knowledge transfer
have been underestimated in development theory and policy. This is reflected in the
World Development Report from 1998/99: "This World Development Report proposes
that we look at the problems of development in a new way – from the perspective of
knowledge" (The World Bank, 1999, p.1). The report underlines that it will not be easy
to close the knowledge gaps ("tap global knowledge and create local knowledge") and
that governments have to formulate national strategies including policies for acquiring,
absorbing and communicating knowledge.
Globalisation and sustainable development
The economics of development strategies have tended to build upon a dynamic
production function approach: Together with labor and capital, knowledge (technology)
and nature (land) are regarded as factors of production. The factors of production
deliver inputs to the production process, which in turn delivers outputs in the form of
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private and public goods and services. If the form of the production function can be
formulated, it is possible to analyse the contribution of increases in each of the factors
of production and improvements in their efficiency to economic growth and
development. Increasingly, however, this simplified perspective has been challenged.
The 1999/2000 report (Entering the 21st century) concentrates on the two combined
phenomena globalization and localization and the message is that new institutional
responses are needed. At the same time it points to the growing importance of social
and natural capital. Globalization means that national government need to seek
agreements with other governments and international organizations. Localization
requires them to cooperate with cities, regions and local communities. In this
connection the importance of social capital is emphasized: "- indeed it is hard to
overemphasize the importance of networks of trust and association for sustainable
development" (p. 18).
The globalising learning economy
The ‘learning economy’ concept (Lundvall and Johnson 1994, Lundvall and Borràs 1999) is based upon
the hypothesis that over the last decades an acceleration of both knowledge creation and knowledge
destruction has taken place. Individuals and institutions need to renew their competencies more often than
before, because the problems they face change more rapidly. And at the same time the segments of
society that is affected by accelerating change has grown considerably. Therefore, in a wide set of
economic activities what constitutes success is not so much having access to a stock of specialised
knowledge. The key to success is, rather, rapid learning and forgetting (when old ways of doing things get
in the way of learning new ways).
On the other hand, we also refer to the so-called globalisation. In recent years the interconnections
between geographically different part of the world have considerably increased and this has also
multiplied the learning opportunities. But globalisation is an uneven and ongoing process. In some areas
such as markets for financial assets it has developed very far while in others, more directly related to
competence building and innovation, national borders still remain crucial (Iammarino and Archibugi,
2000). Neither does the globalising process provide advantages to all social groups and regions and it
does not automatically reduce disparities. While some parts of the economy are at the core of the current
trends, others have been marginalized. We have therefore preferred to refer to a ‘globalising’ rather than
to a ‘global’ economy to stress that the current state of the world remains far from one characterised by a
trully global economy and society.
It is important to emphasise how the ‘learning’ economy and the ‘globalising’ economy are strictly
connected. A process of cumulative causation has taken place. On the one hand, the development of an
integrated world economy has allowed to acquire information, expertise and technology at a faster pace
and often at lower costs than in the past. On the other hand, the current globalisation has been nurtured by
a generation of new technologies. ICTs have in other words acted as the material devices to allow
globalisation to occur (Archibugi and Lundvall 2000).
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Furthermore, the report underlines that development does not trickle down from
economic growth alone, but has to be pursued through a range of outcomes related to
equality, education, health, the environment, culture, and social well-being (p. 20). It
suggests that a range of complementary policies are needed. These include policies to
meet environmental challenges, which in the report are regarded as a dimension of
globalization.
This is just one illustration of how globalisation and the growing international
interdependence tends to impose an even more ambitious and complex agenda for the
development of low income countries. Not only are these countries expected to enter on
growth trajectories that make it possible for them to catch up with the OECD-countries.
They are also expected to do so with respect for basic social and political rights and
with some restraint when it comes to the negative environmental impact.1 They are thus
faced with the challenge of designing ways to increase international competitiveness,
that are socially and ecologically sustainable. Another way to present the new and more
ambitious agenda for development is to define four different kinds of capital that need
to be accumulated, reproduced and combined in order to ensure sustainability.
Diagram 1: Resources fundamental for economic growth –
combining the tangible and reproducible dimensions
Easily
resources
reproducible Less easily reproducible
resources
Tangible resources
1. Production capital
2. Natural capital
Intangible resources
3. Intellectual capital
4. Social capital
The diagram illustrates that economic growth is faced with a double challenge in terms
of sustainability and that there is an immanent risk of undermining not only the natural
basis of material production. While the creation of tangible capital may be threatened by
a neglect of environmental sustainability, the production and efficient use of intellectual
capital is as fundamentally depending upon social capital. A development strategy that
focuses only on production capital and intellectual capital is not sustainable.
Innovation may have a positive role in bolstering sustainability. Technical innovation,
for instance in terms of developing substitutes to naturally scarce raw products, may
help to overcome the fact that natural capital cannot always be reproduced. In a similar
vein social innovation and institutional redesign - for instance aiming at reducing
corruption and increasing popular participation in the implementation of development
programmes - may help to overcome a crisis where social capital is foundering. In both
1
In fact, it is assumed that growth trajectories are only economically viable if they. at the same
time, are socially and environmentally sustainable.
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cases it is important to note that the workings of unhampered market forces will erode
the basis of economic growth.
This perspective calls for a systemic approach and it indicates a broader and more
interdisciplinary approach to economic growth than standard economics. It also differs
in being more explicit in terms of the institutional assumptions made and especially in
avoiding any assumption about factors being independent. This reflects the system's
perspective with its emphasis on virtuous and vicious circles and on match and
mismatch between elements and subsystems.
Market or state
The traditional ideological battle about the role of the market and the state has also to
be reconsidered. Economic reform aiming at liberalisation has worked in some
countries but not in others. Some of the most successful countries have been
characterised by active government intervention, while other countries with
interventionist states have had very little success with promoting economic
development. According to the World Bank the question is no longer if it is the market
or the state which should be the driving force in development, but how the market and
the state may complement each other and interact (World Development Report,
1999/2000).
The report from 1997 (The State in a Changing World) also focuses on the
complementarities between state and market and on the importance of adjusting state
functions and policies to the institutional capability, which, in turn, can only be
improved over the long run. This implies that each country has to match its policies to
its institutional capacity and to make a plan for the long run improvement of its
institutional framework.
Innovation system perspective - the logical consequence of the World Bank
analysis
The recent World Bank Reports thus give more justice to the complexity of the task of
defining and implementing a national development strategy. The most extreme
ideological positions have been surrendered. Simplistic single factor explanations of
underdevelopment are explicitly criticized, while it is recognised that competence
building, in the broad sense, has become a key factor in development. But the downside
of this openness is that the reports may leave the reader with too little guidance on how
to analyse the problem of development and especially on how to approach the task of
designing development strategies in the new context.
Given the analytical content of the reports it is remarkable that they give so little
attention to the concept of innovation systems. If we take seriously that competence
building is at the core of current development, that the interaction between factors
matters and that integration of policies is needed, the innovation system concept
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presents itself as a useful tool. In the next section, we will present different approaches
to innovation systems and discuss their relevance for development strategies.
One of the basic ideas behind this paper is that a systemic approach, where economic
development explicitly makes use of the innovation system concept is one way to
capture and cope with the new emphasis on knowledge in the recent World Bank
reports as well as with the more complex objectives. Without an integrated strategy that
combines technical, organizational and institutional innovations, it is not possible to
integrate the economic, social and ecological aspects and to establish a sustainable
development path.
National systems and economic development
Production, business and innovation systems
One major problem with the traditional production function approach to economic
growth is that it is based on the assumption that production factors operate
independently in relation to economic growth. One way to take into account that factors
interact and co-evolve in the process of economic development is to focus on national
systems. Here we will briefly introduce and compare three different approaches to
national systems:
-
National systems of production
-
National business systems
-
National systems of innovation
Each of these concepts may be seen as referring to a different type of ‘capital’ as
defined above. The production system approach emphasises the formation of
production capital. The business system approach is the one that gets closest to the
concept of social capital. It focuses on the organisation of firms and markets and looks
for how the cultural and institutional factors affect the economy in these respects.
Finally, the innovation system approach is the one most strongly related to intellectual
capital.2
National systems of production
In the 60s and 70s, French structuralist economists developed an analysis of national
systems of production that was rooted in the Marxian reproduction schemes. They
assumed that different sectors affect growth differently and that the most important
sectors for economic growth were located upstream. This led them into ordering
2
Recently attempts have been made to broaden the innovation system approach so that it also
includes sustainability and natural capital (see Olmann-Segura 1999)
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national systems in a hierarchy. It was, for instance, assumed that countries such as the
US and Germany had a stronger economy than France because their production systems
were specialised in the production of machinery to produce machinery (machine tools),
while France was specialised in the production of machinery for the production of semimanufactured goods (Gresi 1976). It also led them to recommend developing countries
to establish, at an early stage, activities belonging to the sector producing machinery
(Bernis 1966).
This perspective was combined with a life cycle perspective on national systems by
Esben Sloth Andersen (Andersen&Lundvall 1988; Andersen 1992). With this revision,
the focus was now explicitly on the development of new technology in an interaction
between user sectors and producer sectors. The quality of demand became an important
element in the process. And, while the French structuralist approach with its emphasis
on scale effects left small and developing countries very limited prospects in terms of
growth and wealth (as does the new growth theory today – see Fagerberg 1995),
Andersen’s revision, through emphasising the qualitative side of the home market
pointed to a less gloomy future for these countries.
Seen from a development policy perspective this model points to the importance of the
specialisation of the economy and to the role of domestic demand. To establish
advanced and ambitious domestic user sectors may be as important as stimulating the
supply side. In this context, it is interesting to note that both qualitative and quantitative
data point to the knowledge intensive business services as a new key sector for
economic growth (Tomlinson 2000). To establish local competence in such sectors may
be regarded as a specific and difficult challenge for less developed economies.
National business systems
The central concern of the business system approach (Whitley 1994a, 1994b, 1996) is to
explain international differences in firm organisation and firm behaviour. The focus is
on the co-ordination of economic activities and on governance issues. National
differences in the organisation of firms and markets are explained by differences in
culture and in formal institutions. Aspects of social capital (see box below) appear as
important explanatory variables. One important implication of the analysis is that there
is no single, best practice, mode of organisation of the firm. Another important point is
that it is not true that “anything goes”, when different organisational traits are
combined. Some combinations are easily established while others are implausible.
Even if there is no ‘best-practise’ the specific design of National Business Systems will
have an impact on economic growth and economic development. Most scholars in this
tradition, however, are business economists and they have been reluctant to go into this
more macro-oriented policy debate. Other analyses of national governance systems go
further in this respect (Freeman 1987). The Japanese success in specific production
fields has, for instance, been explained by its governance form, emphasising the
Japanese business system's predilection for long term commitments as opposed to
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Anglo-Saxon short-termism. Others emphasise how the internal organisation of the
Japanese firm has promoted rapid product innovation and high quality output in specific
sectors (Clark and Fujimoto 1991, Fransman 1995).
In this context it is important to note that what is best practise in the organisation of
business differs between sectors and changes with time. For instance, it may be argued
that the Japanese mode of learning and innovation, while superior in an earlier period,
might have become to rigid in the context of a speed up of technical and organisational
change. And, vice versa, that the US mode has become more successful in this new
context (Ernst and Lundvall 1997).
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Social capital and economic development
A recent debate in economic and political sociology relates to ‘social capital’. The basic ideas behind this
concept have their roots in classical sociology (Weber, Durkheim, Simmel and Marx) and is about the
cohesion of social systems. In its modern form the most well-known contribution is the one by Putnam
(1993) where he shows that the same formal political structure works much more efficiently in the North
than in the South of Italy. The main explanation is the different presence of social capital as expressed in
participation in civic organisations and networks.
Most of the ensuing literature locates social capital in the ‘civil society’, i.e. in the relationships formed
outside the formal political apparatus and the business sector. Social capital is assumed to be proportional
to the density of relationships among citizens and special weight is given to the frequency of participation
in organisations extending outside the border of the family. The relationship between the extension of the
state and the stock of social capital as implanted in civil society has in several contributions been
presented as a negative correlation. The extension of the welfare state has been assumed to undermine
civil society networks (Fukuyama, 1995).
Woolcock (1998) has criticised and elaborated the concept so that it can be used to analyse economic
development. Woolcock introduces four different dinensions of social capital and demonstrates that
getting too much of one and too little of another may undermine the development capability of the
system. At the micro level, he points to the need to combine strong internal cohesion (integration) with
openness to the outer world (linkage). A densely networked but closed community will soon experience
limits for further development. At the macro level, he introduces the role of the state as a factor that can
have either a positive or a negative role in relation to economic development. On the one hand, the state
needs to have strong roots in the rest of society (synergy), otherwise it will not be able to mobilise
resources and adapt policies to the new demands that will originate in the course of the development
process. On the other hand, it is crucial that the state has an element of autonomy (organisational
integrity) so that it does not become an instrument for partial interests and undermined by corruption.
The insight that social capital is a key element in the learning economy has implications for development
strategies in low income countries. Training government officials so that they become self-confident and
incorruptible without becoming an isolated caste with little understanding for the problems of farmers,
workers and businessmen may be fundamental for creating a developmental state. To encourage
programmes where local collaboration is strengthened but at the same time linked to the wider community
may be another key ingredient in innovation policy.
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National innovation systems
The most fundamental reason for scholars to begin to think in terms of innovation
systems had to do with the fact that it was, increasingly, realized that innovation is an
interactive process.3
While production systems put the emphasis on the structural characteristics these are
completely neglected in the business system approach. In the business system approach
the focus is on cultural, social and institutional dimension of national economies. The
concept of a “national system of innovation” is in a sense a synthesis of these two
perspectives, since it puts at the centre of the analysis the co-evolution of economic
structures and institutions and how this co-evolution affects the production and use of
‘intellectual capital’.
Some authors from the US S&T-tradition, tend to regard the NSI-concept as a followup and an incremental broadening of earlier analyses of national science systems and
national technology policies (see for instance the definition given in Mowery&Oxley,
1995, p.80). To them, the key issue is to map indicators of national specialisation and
performance regarding innovation, R&D-efforts and S&T-organisations. The policy
issues raised are typically related almost exclusively to science and technology policy.
The approach developed by Cristopher Freeman (1987) and the 'Aalborg-version' of the
national innovation system-approach (Lundvall 1985; Lundvall 1992) go further,
however. Especially, it takes as its starting point the system of production and the fact
that important parts of the knowledge base are tacit (Polanyi 1966) and emanate from
routine-based learning-by-doing, -using and -interacting and not only from search
activities related to science and technology.
These differences reflect to a certain degree the national origin of the analysts. In small,
as in developing, countries it is obvious that the competence base bolstering economic
performance is not primarily formalised scientific knowledge. In a big country, such as
the US, with dominating firms operating at the technological and scientific front, this is
much less obvious.
Most empirical studies of innovation systems show that national systems differ both in
terms of specialisation patterns and in terms of the institutional set up. They also show
that these characteristics have strong historical roots. The current specialisation of
3
The concept ‘innovation system’ was introduced in a booklet on user-producer interaction in the
middle of the 80s (Lundvall 1985:55) to capture the relationships and interactions between R&Dlaboratories and technological institutes, on the one hand, and the production system, on the other
hand. The first widely diffused publication that used the concept of a “national system of
innovation” was the analysis of Japan by Christopher Freeman (1987). The concept was definitely
established in the innovation literature as a result of the collaboration between Freeman (1988),
Nelson (1988) and Lundvall (1988) in the collective work on Technology and Economic Theory
(Dosi et al., 1988).
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production and trade as well as the institutional characteristics reflect patterns that were
established several decades, if not a century ago.
Techno-globalism, national systems of innovation and innovation policy
Recent work by scholars has contributed to a specification of the scope and depth of globalisation in the
field of innovation. Globalisation of technology has been separated into three different categories;
international exploitation of technology, technological collaboration and generation of technology; and
each of these have been carefully empirically mapped.
The result is that the most pertinent and the most rapidly growing form of globalisation is exploitation
abroad of technologies generated in the home country. There is substantial growth in technological
collaboration aiming at getting access to the relative strongholds abroad. The frequency and the growth of
global creation of new technology where multinational firms locate their development of new products
and processes abroad remains relatively low as compared to the other two forms.
The scholars conclude that national systems of innovation become more rather than less important in this
context and they demonstrate that these become more and more specific in terms of their technological
specialisation. They also conclude that the agenda for active innovation policy is extended rather than
made obsolete by these developments (Archibugi and Michie, 1997)
The performance of a national system will reflect two types of ‘matching’ problems or
two different forms of ‘synergy’. First, the system may match more or less well with the
global context and, second, its different components may match more or less well with
each other. Some ten years ago the Japanese innovation system appeared to be the one
that matched especially well the global context, while today there is a tendency to see
the US system as the one that interacts most successfully with the global dynamics.
It is important to note that in both cases the internal synergy is all but perfect. The
Japanese university system was weak in its contribution to basic science and it gave too
little room for new ventures. The US system for human resource development is in
many respects quite deplorable – until recently most schools in the Mecca of ICT –
Silicon Valley - could not afford to buy computers to their students. The lack of broad
participation of employees in US firms reflect insufficient training and lack of mutual
commitment.
A development strategy based on an innovation system approach would start by
analysing all parts of the economy that contribute to competence building and
innovation. And especially it would focus on the linkages and synergies between the
parts that form the system as a whole. To have excellent universities and good academic
training is of little relevance, if the private sector has neither direct nor indirect links to
the university system. If firms have great difficulties to form networks and to co-operate
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in the production and use of knowledge it may be of little use to stimulate the
competence building at the level of the single firm.
The old management concept of SWOT-analysis (Strengths, Weaknesses, Opportunities
and Threats) can be invoked here. Opportunities and threats relate to the actual and
potential matching with the global development, while strengths and weaknesses will
include the location of strong clusters as well as ‘missing links’ in the system. Currently
it is especially important to take into account the very rapid change in the global
environment and, therefore, elements of technology (and social) foresight may be
helpful to locate the need for breaking up old relationships and establish new ones.
In the context of the globalising learning economy the crucial elements and linkages in
the innovation systems are those that have an impact on the learning capability of
individuals, organisations and regions. So far the studies of national systems of
innovation have given too little emphasis to the subsystem related to human resource
development. This includes the formal education and training, the labour market
dynamics and the organisation of knowledge creation and learning within firms and in
networks. This subsystem will be confronted with very strong needs for social invention
in the near future in all national systems and quite a lot of the peculiarities of national
systems are rooted in this sub-system and, as we shall see in the next section, there is a
special need to integrate policy efforts around this sub system.
On the need to integrate policies promoting competence building and
innovation
The basic hypothesis – a speed up of the rate of change and learning calls for
integrating narrow perspectives and strategies
As we have seen, there is now growing agreement that knowledge is at the very core of
economic development. This is, for instance, reflected in OECD-publications referring
to the knowledge-based economy (OECD 1996; Foray and Lundvall 1996). A related
but alternative concept that we have promoted here is the ‘learning economy’. It
includes the hypothesis that during the last decades an acceleration of both knowledge
creation and knowledge destruction has taken place.
This new context of accelerating change calls for new strategies at the level of the firm,
the region, the nation state and the transnational cooperation. It also requires a
rethinking of industrial relations and the role of trade unions. While knowledge
production and policy making through decades have been characterised by growing
specialisation and more narrow fields of responsibilities, the learning economy calls for
lateral thinking and for a integration of separate perspectives and strategies. In this
paper, we will focus on the need for integrating organisational change, labour market
dynamics and innovation at the level of the firm and on the implications for
development strategies. To begin with, we present the major concepts and elements of
the learning economy.
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Defining the learning economy
In the present context we define learning as the acquisition of competences and skills
that make the learning agent – be it an individual or an organisation - more successful in
pursuing his/its own goals.
The choice of definition reflects that it is especially important to make the distinction
between information and knowledge in the current information society era. Know-how –
and not least skills in selecting and using information - grows in importance as
information becomes more complex and abundant. It plays a key role in all activities in
the economic sphere. What distinguishes the succesful businessmen from their more
mediocre colleagues is know-how, or personal knowledge, for instance in the shape of
experience based capabilities to interpret and give meaning to emerging complex
patterns and to act purposefully on the basis of this insight.
Know-who has also become increasingly important. The general trend towards a more
composite knowledge base where a new product typically has to combine elements
rooted in many technologies, while each technology is rooted in several different
scientific disciplines, makes it crucial to have access to many different sources of
knowledge. Know-who involves information about who knows what and who knows to
do what. But it also involves the social capability to co-operate and communicate with
different kinds of people and experts. This one aspect of the move toward a Network
Economy.
Normally we think about know-how as personal and individual. But it can be embedded
also in regions and organisations (Arrow, 1994). The shared routines, the common
codes for communication and the formation of social relationships within teams may be
regarded as different modes of embodying know-how into collective units.
The distinction between tacit and explicit knowledge is important, because tacitness
implies that it is not possible to separate the knowledge from its carrier (either an
individual or an organisation). Tacit knowledge can be accessed only by hiring skilled
people or through merger with other organisations. It cannot be transferred and sold as
separate items in the market. In the learning economy, where the pace of change is high,
tacit elements remain at the core of individual as well as collective knowledge. Since
codification is costly it is most adequate to embark upon it when there is a high degree
of continuity in the problems to be coped with.
The radical development of information and communication technologies has an
equivocal impact on the codification of tacit knowledge. On the one hand it gives
stronger incentives and more effective procedures for codification. On the other hand
the very growth in the amount of information made accessible to economic agents,
increases the demand for skills in selecting and using information intelligently. The
major impact of the information technology revolution is, however, that it speeds up the
process of change in the economy. For this and other reasons, experience based learning
tends to become even more important in ‘the new economy’ than it was before.
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Protecting and widening the knowledge base of the firm
The competitive advantage of a firm is rooted in a set of competences not easily
imitated by potential competitors. Elements of collective tacit knowledge are thus at the
very core of the competitiveness of the firm. The tacit knowledge embodied in
individuals may easily disappear in fluid labour markets while codified knowledge may
be more easily copied by outsiders.
Intellectual property rights such as patents represent one way to limit the access of
competitors to the core competences of the firm. They play different roles in different
sectors but on average the move toward a ‘learning economy’ tends to make them less
adequate – at least as the core of knowledge management strategies. As the speed of
change accelerates, it becomes more important for the firm to get access to new sources
of knowledge (through recruitment, internal learning and networking) than to hinder
others to get access to its own competences. This is why patents are increasingly used as
chips for knowledge trading between competing and collaborating firms rather than just
as instruments of secrecy.
Learning is a social process based on trust and social capital
Know-how is typically learnt in something similar to apprenticeship-relationships
where the apprentice follows his master and relies upon him as his trustworthy authority
(Polanyi, 1958/1978, p.53 et passim). Know-who is learnt in social practise and some of
it is 'learnt' in specialised education environments. Communities of engineers and
experts are kept together by re-unions of alumnae and by professional societies giving
the participant access to know-how trading with colleagues (Carter, 1989). It also
develops in day-to-day dealings with customers, sub-contractors and independent
institutes.
The learning economy needs a lot of trust in order to be successful. And as Kenneth
Arrow has pointed out 'trust cannot be bought: and if it could be bought it would have
no value whatsoever' (Arrow, 1971). The fundamental role of trust raises strong doubts
about how to interpret the standard assumption in economic theory that the most
efficient economy is one where individuals act as ‘economic men’ who calculate the
outcomes of all alternatives in order to select the one which is best for themselves. In
the learning economy the importance of the ethical dimension and social capital
increases enormously. Little can be learnt and information cannot be used effectively in
a society where there is little trust. This is the background for one of the basic inherent
contradictions in the learning economy that we will adress below.
Building learning organisations and integrating strategies of competence building
at the level of the firm
In what follows we will refer to new research results about the implementation of the
learning economy in Denmark. We will give a picture of the dominating trends that is
15
more positive than the one based on studies of the US and the UK, where the emphasis
is on negative impact on working conditions in terms of instability, insecurity and
stress. We believe that it is important to recognise that there are different ways to
handle the challenges of the globalising learning economy. We would even go as far as
arguing that the Scandinavian ways will prove to be more sustainable than the ones
predominating in the Anglo-saxon countries.
Our research shows that there is a strong synergy between the introduction of new forms
of organisation and the performance and innovative capacity of the firm (Lundvall,
1999 and Lundvall&Nielsen, 1999). Establishing the firm as a learning organisation
characterised by decentralised responsibility, team work, circulation of employees
between departments and investment in training has a positive impact on a series of
performance variables. Flexible firms are characterised by higher productivity, by
higher rates of growth and stability in terms of employment and they are more
innovative in terms of new products. Our research also shows that success in terms of
innovation is even greater when such a strategy is combined with active networking in
relation to customers, suppliers and knowledge institutions.
But we also find that, so far, there is only a small minority of all firms (10-15%) that
have introduced the major traits of the learning organisation. There is an enormous
unexploited reserve of economic competitiveness, especially in manufacturing and the
business service sectors.
Our conclusion is that a new kind of integrated competence building strategy is needed
and that such a strategy should take into account how to combine the three different
major sources of competence building: Internal competence building, hiring and firing
and network positioning (see the diagram above).
Firms differ in how strongly they emphasise each of these elements both between and
within national innovation systems. Japanese firms have emphasised internal
competence building while most hi-tech firms in Silicon Valley depend on learning
through high inter-firm mobility of employees within the industrial district. Hewlett
Packard is one US-firm that has given strong emphasis to internal competence building
but it is now moving toward a compromise strategy with more openness to hiring
experienced employees from other firms. In Denmark the institutional set-up of the
16
training system and the labour market supports networking firms and high mobility in
the labour market, making it attractive for firms to locate in ‘industrial districts’.
There is no single optimal strategy in this respect. Under all circumstances, it is
important when designing public training and labour market reforms to be aware of the
behaviour of firms in this respect and to counterbalance the needs of the firms to social
needs. The aim of reform should be a context where firms contribute to competence
building without undermining social cohesion in the system as a whole.
Industrial relations and the role of trade unions in the learning economy
When Danish managers were asked what factors stimulated or hampered the movement
toward learning organisations many of them referred to shop stewards (tillidsmænd) as
a positive factor and only a small minority mentioned them as raising barriers to
organisational change. This indicates that trade unions at the central and local level may
be a positive factor when firms need to cope with the new challenges of the learning
economy. The presence of strong organised labour may be regarded as a positive factor
in global competition - especially if it is combined with mutually respected social
contract.
Giving workers and their representatives the right incentives to participate positively in
building learning organisations may be a question of creating a minimum of security in
processes of restructuring – in Denmark the collectively financed unemployment
support system has played a key role in this respect. The support level, and its duration,
has made it possible to combine high inter-firm mobility with a high degree of security
among workers (in spite of an inter-firm mobility as high as in the US Danish workers
express less worries of increased insecurity in their job situations than do workers in
other European countries with much less labour mobility and more formal contractual
security). This should be contrasted with the super-flexible Anglo-Saxon model where
all or most of the costs of being flexible is covered by the individual.
The fact that access to learning capability is what constitutes success among the
members of trade unions should affect the priorities of the trade union movement.
Agreements between business and labour on the development of new forms of work
organisation and and skill development becomes more and more important for both
parties.
A special new responsibility which affects both sides is to cope with the growing
tendency toward social exclusion and not least the exclusion of workers of foreign
origin. In general, trade unions need to be prepared to develop new kinds of solidarity
that focus on redistribution of learning capabilities. Management also should be forced
to take on more responsibility for this problem. Our research shows a strong Mattheussyndrome in the human management strategy of most firms: It is primarily those with
extensive training that are offered even more training within firms. It is tempting for
17
firms to focus skill upgrading on those who are rapid learners and leave the rest to
public training programmes.
Also in the field of industrial relations there is a need for reintegrating functions and
responsibilities. Traditional interests in terms of pay, working time and job security
must be linked to, and assessed in relation to, competence building and the distribution
of learning capabilities.
The challenge of the Learning Economy and the need for a new type of policy coordination
As pointed out in the introduction to this section, there is a growing consensus on the
need to focus on long term competence building in firms and in society as a whole. At
the same time, the prevailing institutional set up and global competition tend to give
predominance to short term financial objectives in policy making. At the institutional
level this is reflected in the fact that ministries of finance have become the only agency
taking on a responsibility for co-ordinating the many specialised area policies. Area
specific ministries tend to identify with their own ’customers’ and take little interest in
global objectives of society.
The concept ’the learning economy’ has its roots in an analysis of globalisation,
technical innovation and industrial dynamics (Lundvall and Johnson 1994; Lundvall
and Borràs 1999). But the concept also implies a new perspective on a broad set of
policies including social policy, labour market policy, education policy, industrial
policy, energy policy, environmental policy and science and technology policy.
Specifically, the concept calls for new national development strategies with coordination across these policy areas.
Social and distributional policies need to focus more strongly on the distribution and
redistribution of learning capabilities. It becomes increasingly costly and difficult to
redistribute welfare, ex post, in a society with an uneven distribution of competence.
Therefore there is a need for stronger emphasis on a ’new new deal’ where weak
learners (regions as well as individuals) are given privileged access to competence
upgrading.
The effectiveness of labour market institutions and policy has so far been judged
mainly from a static allocation perspective. There is a need to shift the perspective and
to focus on how the labour market supports competence building at the individual level
and at the level of firms. This implies, for instance, that some dimensions of flexibility
and mobility are more productive than others and that there may be third roads different
from from Anglo-Saxon maximum flexibility and Mediterranean contractual job
security – cf. for the Danish model characterised by a unique combination of relative
income security, high participation and mobility rates.
Education and training policy needs to build institutions that promote simultaneously
general and specific competences, learning capability and life-long learning. This points
18
toward a new educational and training methods that combine individual learning plans
with collective problem-oriented styles of learning. A real commitment among
employers, employees and policy makers to life-long learning with a strong interaction
between schools and practise-based learning is necessary.
Industrial policy needs to include an adjustment to each other of competition policy and
policies aiming at developing learning organisations and competence building
networks. Intensified competition may stimulate superficial change rather than
competence building if not combined with organisational change and new forms of
inter-firm collaboration. Energy and environment policies need to take into account
their impact on competence building in the economy.
Science and technology policy needs to support incremental innovation and the
upgrading of competence in traditional industries as well as the formation and growth
of high technology industries. For instance, the reallocation of academically trained
workers toward small and medium sized firms is a key also to the formation of
networks with universities and other knowledge institutions.
These area specific policies need to be brought together and attuned into a common
strategy. In the learning economy it is highly problematic to leave policy co-ordination
exclusively to ministries of finance and to central banks – their visions of the world are
necessarily biased toward the monetary dimension of the economy and thereby toward
the short term, and they do not include the fact that many area specific policies affect
learning and innovation in many parts of the economy.
In concluding the analysis of the Danish innovation system we proposed the
establishhment of a High Level Council on Innovation and Competence Building with
the Prime Minister as its chairman and with at least as much political weight as the
Ministry of Finance and the Central Bank. Such a new institution would have as one of
its strategic responsibilities to develop a common vision for how to cope with the
challenges of the globalising learning economy. The basis of such a vision must be both
a better understanding of the distinct national system of competence building and
innovation and of the global context in which it has to operate. In the framework of
such an understanding international bench-marking becomes a meaningful support to
plicy learning at the national level (Lundvall and Tomlinson 2000).
19
An analytical framework for policy learning
The discussion above points to a need for a new analytical framework for analyzing development
strategies. The present knowledge about development mechanisms and the present institutional capability
do not justify a means-ends, rational choice approach in policy making. What is needed is rather a
continued process of policy learning. In fact, policy learning may be seen as an integrated part of the
globalizing learning economy. It can take different forms, for example:
-
Forming visions about sustainable development and clarifying the value premises of development
policy.
-
Focus on institution building that supports the production and reproduction of social capital and
locating and diffusing international, regional and local ‘good practises’ in this field.
-
Stimulating, or at least allowing, regional and local experiments in policy areas in need of reform.
-
Developing new methods to evaluate the ourcomes of such experiments that take into account
learning effects.
-
Analysing and comparing systemic features and critically important indicators in a form for
intelligent benchmarking across regions, organisations and nations (Lundvall and Tomlinson 2000).
-
Developing new fora for democratic participation in the design and implementation of development
strategies.
-
Establishing new regional international forms of collaboration aiming at enhancing the experience
building from participation in international organizations and regional and local communities.
These different forms for policy learning need to be combined with a systematic surveying of the
changing global environment and of changes in the systemic features of the national economy.
Contradictions in the globalizing learning economy
The vulnerability of development strategies
Even the most intelligent and well informed national strategy is vulnerable in the
present era of rapid change. Japan and Asian NIS have experienced how what was
generally looked upon as miracles suddenly turned into what the same experts defined
as failures and crises. The fact that the capitalist market economy has been so widely
diffused in the world makes the global economic system even more instable.
‘Traditional sectors’ that might function as ‘automatic stabilisers’ in a capitalist crises
have become much smaller than they were in the world depresssion in the 30’s. The
transformation of public activities into market related services may also contributes to
the increasing risk for local and general crises.
20
Financial speculation seems to become more and more unhampered also because it is
now finance capital that judges what is ‘good-practise’ among firms as well as among
governments. This predominance of financial capital is one of the major factors that
speed up the rate of change and thereby the need for accelerating learning. At the same
time the uninhibited rule of finance capital gets into serious conflict with some of the
fundamental prerequisites for the sustainability of the learning economy.
Is it sustainable to leave the financial sector in charge of the Knowledge based economy?
A very peculiar paradox appears when you contrast the role of competence in the financial sector with its
dominating position in the so-called knowledge based economy. There is no other single area where
competence is so difficult to assess as in the financial sector. The Noble Prize Committee for Economics
gave us a dramatic demonstration of this some years ago when they gave the prize to two US economists
whose management of a US-fund soon after almost led the whole world economy to a major crash. In
Denmark the most successful player in a nation-wide game for investment in shares is a 17 year old
school boy with no earlier experience. If one wants to study trivial and contradictory statements, taken
dead seriously of everybody in power, the financial pages are the best place to look. It is a fundamental
question if it is at all sustainable to leave the over all management of ‘the knowledge based economy’ to a
sector where intellectual standards are so low and where school boys appear to be more competent than
Noble Prize winners.
The commodification of knowledge
Knowledge is increasingly treated as a commodity and firms are trying to capture
knowledge economies, for example network economies, through intellectual property
rights. On the other hand knowledge is socially produced in narrow and broad networks,
which may be destroyed or at least damaged by a commodification of knowledge. On
the one hand firms want as free access as possible to information and knowledge in
order to profit on its public goods characteristics. On the other hand they want to charge
as much as possible for the knowledge they produce themselves.
The tendency to treat information and knowledge as commodities is ubiquitous. Firms
are increasingly becoming aware of the possibilities to sell knowledge in different ways.
Business consultancy is one of the fastest growing activities in some high-income
countries for example. Also, public organizations and government agencies are
increasingly charging for their supply of information and knowledge services.
Budgetary pressures support this tendency; public organizations are required partly to
finance their activities in this way.
This "commodification" of knowledge is in itself contradictory in several ways. As has
been mentioned above, knowledge is socially produced through interactive learning,
which often makes it difficult to capture and distribute its returns. It is also well known
that some peculiar characteristics of knowledge make it very different from ordinary
21
private goods (it is difficult to sell, since the buyer needs to know what he buys, before
he does it, but once he knows it, he has no interest in paying for it. It is not scarce in the
sense that it diminishes through use, etc.).
In the language of Karl Polanyi one may say that knowledge is a fictitious commodity.
It is embedded in social relations. The productivity of knowledge is not rooted in its
immanent character but in the social relations of which it is a part. It is usually not
valuable in itself, but a social reorganization (institutional change) may be required to
make it valuable. Sometimes it can only be effectively used in networks. Sometimes
knowledge has to be transformed into intellectual property in order to be exploited in
the economy. The commodification process is problematic since it tends to undermine
some of the most important modes of production and use of knowledge. These typically
involve networking and knowledge sharing.
The undermining of social cohesion and social capital
Growth in the learning economy feeds upon social capital. But if left to itself, it tends to
undermine the very same social capital that it feeds upon.
As argued in an earlier section, know-how is typically learnt in something similar to
apprenticeship-relationships where the apprentice follows his master and relies upon
him as his trustworthy authority (Polanyi 1958/1978: 53 et passim). And this exchange
of know-how would not be possible in a purely competitive economy. Little can be
learnt and information cannot be used effectively in a society where there is little trust.
At the same time there is a clear and strong tendency toward polarisation built into the
learning economy. The distribution of the benefits and costs of economic development
has become more uneven during the last decade, with the low-skilled of the labour force
as the major losers (see OECD 1994: 22 et passim). At the global scale, inequality
between rich and poor countries has increased (World Bank 2000).
In the learning economy, there is a growing tension between the process that excludes a
growing proportion of the labour force and the growing need for broad participation in
the change process. It is not obvious that, in the long run, a learning economy can
prosper in a climate of extreme social polarisation. We can see at least three different
patterns in this respect within OECD. In the US, the emphasis is on individuals carrying
the burden of change in highly flexible labour markets while in continental Europe and
Japan some restrictions on quantitative flexiblity remain in function. As a ‘third way’
we have mentioned Denmark and the other small European countries as examples that
combine high mobility and flexibility with some basic social security provided by the
state. Actually, it is a question if the US model is socially sustainable in the long run. So
far it has built some of its success on the massive inflow and use of unskilled illegal
workers and its movement into a trully learning economy may be overestimated because
of the exaggerated focus on the Hi tech sectors. Perhaps the most developed learning
22
economy – defined as one where the focus is on competence building broadly in the
population - is to be found in Europe and not least in Scandinavia rather than in the US.
Another fundamental problem is that the speed-up of change puts a pressure on social
relationships in traditional communities. It contributes to the weakening of traditional
family relationships, local communities and stable workplaces. This is important since
the production of intellectual capital (learning) is strongly dependent on social capital.
To find ways of re-establishing the social capital destroyed by the globalisation process
is a major challenge.
These contradictions are characteristic for capitalism in high-income countries.
However, they may pose even more severe problems for developing countries where it
is often difficult to build adequate knowledge producing networks and where it may be
even more difficult to capture the network economies due to lack of trust and
cooperation. Institutional and organizational innovations are the only solution, but they
are often in short supply and the contradictions of the global learning economy hit many
developing countries with brutal force. To tackle the development problem obviously
requires an approach, which focuses both on knowledge building and utilization and on
organizational and institutional changes that support the accumulation of social capital.
Short termism, speed up of change and knowledge creation
Together, parallel developments in regulation regimes, technology and trade have
created a new kind of ‘hyper-competition’ (D’Aveni, 1994). There is a circular causality
between innovation and competition. On the one hand hyper-competition reflects
accelerated innovation and on the other hand it is driving change and especially
technical innovation both in terms of its rate and direction. Therefore there is a need to
rethink the tuning of policies driving change and their co-ordination with policies
coping with the negative consequences of change.
The very rapidity of change may lead to a misallocation of resources in the sense that
too little resources are used to pursue long-term objectives and the production of
generic knowledge while too much is used to speed-up the movement along known
trajectories. Instead of deep search we get a kind of intellectual strip-mining. This
tendency to focus on short term rather than long term dynamics is reinforced by the
increasingly dominant position of finance capital, and the increasingly important role of
institutional investors, in the governance of firms and by the financial crises of public
sectors (Chesnais&Serfati, 1997).
Capitalist growth and ecological sustainability
There is another more specific contradiction of capitalist growth and development
which tends to further aggravate the problem. It is connected to the need for ecological
sustainability. As discussed above, the globalizing learning economy is characterized by
a tendency towards short-term economic calculations and speedy processes of decision23
making. This is in contradiction with a sustainable use of ecological resources, which
may be quickly exploited and destroyed, but which are usually built up through longterm, slow and complicated processes. To this may be added that the increasing
exposition to international competition and to short term decision-making leads to a
pressure for quickly raising the levels of consumer satisfaction, which heightens the
exploitation pressure on ecological resources. The dependence of the economy on
ecological environment is exposed and aggravated in the globalizing learning economy.
As a response, some countries are now trying to integrate ecological resources more and
more into the economic process. Property rights are formed where no property existed
and common property is transformed into private property. Nature is turned into
commodities or new products. Services, which include elements of nature, are
developed, as for example eco-tourism and carbon bonds. This is done in order to
capture some rents from nature. However, the act of doing so may in some cases
negatively affect other economic activities and the effects on ecosystems are not always
clear. The consequences of these changes for sustainable development depend on how
the ecological and social systems interact - something which to a high degree is affected
by the institutional system (Olmann-Segura 1999).
Conclusions
Slowing down the pace at the global level
We have seen that the very speed of change as provoked by the dominance of a new
type of financial capital implies high costs in terms of destruction of social and natural
capital. Actually, it tends to undermine the basis for continuous learning as well. This
raises some fundamental questions about the possibility to slow down the rate of change
in the capitalist economy.
It is difficult to implement a more general slow down of change at the local or national
level. Citizens in one country may decide that they are willing to pay a price in terms of
a lower living standard for regional slow-down. But there are historical examples that
indicate that such a strategy is untenable in the longer run. To run slower than the rest
seems to be self-defeating in the sense that running a little slower tends to end up with
moving backwards. This does not rule out that individual countries or groups of
countries introduce specific regulations to protect certain fundamental resources and
values also when no general consensus on global regulations can be attained. There
should be left room for such national regulations in global treaties.
The most obvious solution when it comes to implement a general slow down of change
would therefore be to go for world-wide agreements. These may be specific regulations
referring to ecological and social sustainability. Again the experience is that there are
great diffculties in reaching agreement because the dominating player, the US, does not
seem to be willing to accept any kind of limitations on its souverainety.
24
There have been some interesting proposals that are of a different character and more
general in their impact on different regions and sectors. Indirectly they may also have
an impact on the speed up of change and on hyper-competition. One is the Tobin tax
that aims at slowing down speculation and the flux in financial markets. Another is the
bit tax proposed by Luc Soete and others. The strength of both these proposals is that
they are general rather than specific and that they in principle should be possible to
implement and control. A global sales tax on all exports and imports of commodities
and services where the revenues went to creating a development potential in weak
countries and regions would be another general instrument with a similar impact.
It should be in the interest of all responsible national governments to contribute to the
establishment of a new global order that is more stable, just and secure. This calls for a
new type of political process where politicians are willing to confront the economic
forces they now tend to become subordinate to. There is a need for strong political
leadership that is regarded as legitimate and democratic among citizens in order to cope
with the increasingly speculative capitalism and in order to avoid that the learning
economy ends up as a feudal anarchy ruled by the jungle law.
Increasing the capability to absorb change at the national and regional level
At the national and regional level the alternative to slow down change is to increase the
capability to provoke rapid change (innovation policy) and to increase the capability to
absorb change (regional policy and human resource policy). A ‘no regret’ response to
this challenge is to reinforce efforts to develop human resources in the form of life-long
learning. Special emphasis should be given to the weaker regions and workers and to
helping those in enhancing their learning capabilities.
The basic principle is to create a learning economy that can cope with rapid change and
be successful in developing new products and services. This gives priority to policies
aiming at human resource development, creating new forms of organisation, building
innovative networks, reorienting innovation policy toward service sectors and
integrating universities in the innovation process.
Human resource development
There is growing consensus that there is a need for radical change in policies aiming at
human resource development. The distance between the rhetoric and what is actually
taking place in the area is substantial, however. The movement in the education system
toward promoting the capability to learn and the formation of combinations of
theoretical knowledge and social skills is slow.
New forms of organisation
Currently, an organisational revolution is taking place and there is an enormous
potential in European firms in this respect. The full positive impact of information
25
technology on productivity can only be harvested if the organisational forms develop.
New forms of organisation that increase connectivity and interaction between
departments are key elements in accelerating innovation.
Building innovative networks
One of the most dramatic changes in the learning economy is the growing importance of
networking and inter-firm co-operation in connection with innovation. Competition
policy needs further changes in order to respond to the full implications of the new
regime. The formation of networks of firms and of firms and knowledge institutions
should be stimulated at different levels. At the regional level the formation of
knowledge-intensive networks is a key to promote regional development.
A new role for the service sector
The service sector is the one where change is currently most dramatic and this will be
so also for the near future. The service sector - business services, communication
services and other knowledge intensive services – increasingly tend to become key
sectors in relation to the over all industrial dynamics. The traditional focus of industrial
policy on the competitiveness of manufacturing firms is becoming correspondingly less
relevant. Rethinking regulatory systems, including quality control systems, so that they
promote rather than block for innovation in these sectors is one policy task. Another
one is to promote access to knowledge-intensive business services for SMEs and
marginal regions.
Integrating research institutions in the innovation system
According to Gibbons et al. (1994) we have entered a new mode of knowledge-creation
where there is a much stronger connection between science and technology and where
innovation typically will be the outcome of an interaction among a multitude of actors
distributed between many different institutions and locations. These developments point
to the need to integrate the knowledge production taking place at universities more
closely with the innovation process. Matrix-forms of organisations (combining
discipline organised departments with temporary inter-disciplinary centres), buffer
organisations connecting universities with SMEs and circulation of scholars between
basic, applied and development research tasks are obvious policy initiatives in the new
context.
It should be warned against solutions that break down the protection of academic
autonomy. The major function of universities is to train students and scholars in skills
that are crucial for the development, absorption and use of technology and this calls for
a certain degree of autonomy. Also, autonomous basic research is becoming
increasingly important as competition and new governance forms tend to promote
applied and short term development work in the private sector.
26
Adjusting the transformation pressure and redistributing the cost and benefits of
change
These new policy initiatives represent different ways of promoting the national
innovation system. They will have a positive impact on the capability to build
competence and to innovate. This capability will however always have its limits and
therefore it must be considered how strong a transformation pressure the national or
regional economy can cope with without leading to a situation in which destruction
dominates creation of productive forces.
To make sure that there is a basis for a broad particiapation in the promotion of the
innovation system it is crucial that new ways of compensating the victims of rapid
change are developed. A welfare state where there is a collective sharing of both the
costs and the benefits of change without putting unnecessary bonds on the process of
change needs to be designed. One especially important task is to build a ‘new new deal’
that gives privileged access to competence building for slow learners and weak regions
into the policies promoting competence building and innovation.
27
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