1.1.
For the purposes of this study, policy implications arise when our analysis of a
‘knowledge system’ leads us to the conclusion that the system has particular shortcomings that can be improved by specified measures. These measures may be undertaken by one or more of the actors/agents involved in the system; or they may be undertaken by an agent outside the system (e.g. a government agency or some other body).
1.2.
As this interpretation makes clear, by ‘policy implications’ we have far more in mind than simply government measures.
1.3.
We want to make a further distinction regarding policy implications: a.
Those situations where policy measures (as defined here) have made a significant contribution to the creation and working of the knowledge system in question. b.
Where the knowledge system that has been analysed has particular shortcomings that the TELL analyst feels can be improved through appropriate policy measures.
2.1. In most of the TELL case studies, knowledge could not be created, produced and diffused immediately and spontaneously but required specific policy measures to initiate or accompany the coordination of knowledge. In fact, what the case studies show is that some important knowledge coordination failures emerged, in that knowledge that could be profitably coordinated in such a way as to add sufficient value to all the coordinating parties was not coordinated. The policy measures, coming from actors and agents within the system or outside the system, acted as a means to federate and coordinate initiatives in the creation, production or diffusion of knowledge. The outcome of these policy measures is to decrease the costs of information involved in finding out where relevant knowledge is located and in coordinating the production and use of this knowledge.
1

2.2. What the TELL case studies have also shown is that this important link between knowledge and policy is valid for many different industries. The case studies were dedicated to analyse industries in which knowledge was highly tacit and sticky
(clothing, footwear), industries in which knowledge was highly complex and codified
(automobile, telecoms), but also industries in which some bits of knowledge were partly tacit and partly codified (life sciences, plastics). In fact, depending on the nature of knowledge which was created, produced and used, different modes of interfaces and platforms to coordinate knowledge were implemented.
2.3. A first general trend can be underlined concerning the relation between knowledge and policy. This first trend starts with a ‘static’ typology on the nature of knowledge
(modular/unmodular) and suggests implications in terms of policy. On the one hand, when knowledge is highly tacit and sticky in industries, i.e. when the knowledge system is not modular, organizational interfaces are generally implemented.
Organizational interfaces are for instance innovation relay centres, knowledge intensive business services, which tend to favour the development of innovation networks at the local level in the creation, production and use of new bits of knowledge. On the other hand, when knowledge is more codified and complex in industries, i.e. when the knowledge system is modular, market interfaces are generally privileged. Market interfaces tend to promote the development of a market for knowledge, such as for instance the development of a market for patents, at the global level, in the creation, production and use of new bits of knowledge.
2.4. A second general trend can also be mentioned at this stage. This second trend is more concerned with the different phases of development of industries, and is thus intended to capture a more ‘dynamic’ vision of knowledge which is transformed from phase to phase in order to draw some policy implications. Often, the creation of new knowledge which can be considered as an initial phase of development of industries is local, while the production and use of new knowledge which occur in a phase of maturity of industries tend to be more global. Since most industries are characterized by this developmental profile of evolution, this suggests that organizational interfaces should be the dominant mode of coordination of knowledge at the stage of creation, while market interfaces should be privileged in the coordination of knowledge at the stage of production and use.
2.5. In both cases, however, this does not suggests that there exists an optimal type of policy implications, i.e. that one type of policy should be implemented in an exclusive manner. For instance, in any case, organizational interfaces should not exclude the development of market interfaces (and vice versa). If we consider that knowledge is progressively transformed over time (an unmodular system can turn into a modular system), since industries evolve and change over time from phase to phase (an old industry can generate new opportunities, leading to the emergence of new industries), then both types of policy are to be encouraged jointly.
2

3.1. TELECOMS IN SCOTLAND AND FRANCE
3.1.1. MOBILE INDUSTRY IN SCOTLAND
In the case of Scottish small and medium-sized firms developing and selling mobile content and applications, an important contribution was made by the regional economic development government agency (under the new Scottish Parliament), Scottish Enterprise. As shown in detail in the case study, Scottish Enterprise came to the conclusion that the mobile communications sector should be a high-priority because of the rapid growth of this sector.
One of the projects that Scottish Enterprise initiated was a study of newly emergent SME firms in the area of mobile content and applications. (Other projects had covered ‘technology’ firms producing, for example, mobile technologies and equipment.)
As shown in the case study, this project led ultimately to the creation of the MX Alliance, an alliance of many of these firms in Scotland intended to share information, to assist the growth of new firms, and to jointly pursue commercial opportunities. The alliance received both material and human support from Scottish Enterprise in its early formation.
Significantly, many of the firms did not know of each other’s existence before this Scottish
Enterprise project brought them together. In this way, knowledge creation, sharing and use were facilitated by a simple government-initiated project. It is likely that without this project there would have been significantly less joint knowledge creation and use. This points to the potential for government-initiated knowledge coordination.
The case study on the link between these SMEs and Scottish Universities, however, revealed some significant shortcomings. In this section we briefly discuss these shortcomings and then propose some policies to improve them.
It was shown in the case study that large, well-known global companies have little trouble in linking with universities when they want to. They have the necessary resources. Of great importance, they have internal specialist R&D departments where R&D scientists and engineers already network extensively with academics and others who are researching in the field concerned. They therefore either already have knowledge about university-based research in the area, or can easily and at low cost acquire this knowledge. Furthermore, they often have the budget to facilitate cooperation between their company and the university department/researcher/s concerned. In addition, the brand name and status of their company often gives the university and its researchers an added motive to form a link. “We are working with IBM amongst others….” etc etc. This means that both the knowledge problem and the incentive problem are easily overcome in the case of large global companies seeking to link with universities.
However, the situation is very different with what in the study is called ‘independent SMEs’, that is SMEs that use knowledge of a kind that is found in universities, but SMEs that have not spun-off from a university. (University spin-offs obviously are already part of university research networks and therefore find it easier to link with universities.)
3

In great contrast to large global companies, independent SMEs often find it difficult to link with universities in the first place. Using our knowledge terminology, they cannot even begin to coordinate the production and use of knowledge (in their company and in the universities) for the simple reason that they do not know what relevant knowledge resides in the university, nor where it is located (i.e. in which department and individual/s).
There are several reasons why this shortcoming exists. To begin with, the independent SME often has only a small number of technical employees who only have limited knowledge of limited fields. They therefore will not know enough about relevant knowledge in relevant universities. Because they have to be very focused on their company’s current products
(necessary, amongst other things, to produce cash flow), they may not have the time to search for relevant knowledge in universities. Moreover, even if they did search, the costs of finding out what knowledge, if any, exists in which universities can be significant. This is documented in the case study where the author personally contacted all 13 Scottish universities to find out what research was being done in the field of mobile communications.
In addition, the independent SME frequently does not have the budget to pay university departments and staff and in this way provide a material incentive for knowledgecollaboration. Furthermore, because (by definition) they are not a well known company, they cannot offer status as an incentive (cf “We are working with companies like IBM…”).
All this means that in many cases there is a knowledge coordination failure i.e. knowledge that could be profitably coordinated in such a way as to add sufficient value to all the cooperating parties is not being coordinated. It is suggested that this generalisation regarding the problems of independent SMEs attempting to link with universities is a universal problem by no means confined to Scotland.
Can anything be done policy-wise? The case study suggests that steps be taken to improve the flow of information between independent SMEs and universities and in this way reduce the costs of information involved in finding out where relevant knowledge is located and in coordinating the production and use of this knowledge. Examples are given in the case study both of private and public solutions to this problem. For instance, in the private case a private firm has been established in Scotland that has a web site that provides information about relevant university knowledge at a (low) commercial price. In the public case, Scottish
Enterprise has been involved in the establishment of several organisations that provide similar information and initiatives. However, more research is required to establish how effectively these initiatives solve this basic knowledge coordination problem in the case of
SMEs and universities.
3.1.2. INFO-COMMUNICATIONS IN SOPHIA ANTIPOLIS
The telecoms case study has shown that, despite a global context of shakeout and bust of the industry at the national and international level since 2000, a continuous process of entry was observed locally, together with a long term viability of local incumbent companies. The joint presence of 3 big actors in the industry (large companies, norms and standards institutions, academic institutions) played an important contribution to the emergence of this local nonshakeout pattern of evolution. The combined ‘policy measures’ of these 3 players produced a stable environment within which the SA info-communications industry could develop progressively, layer by layer. Firstly, large companies operating in upstream layers
(equipment suppliers, telcos, and IAPs/ISPs) were generally located in SA before the mid
1990s, but started to be involved in SA economic development only recently. Different
4

actions – among which the development of private incubators – can assess this recent involvement. With these various upstream actors on site, a further development of downstream activities – that ‘sit on the top’ of upstream activities – soon became possible.
Secondly, education and scientific institutions also became more operational in SA economic development in the late 1990s. The multiplication of participations into research programmes in which companies were also involved, the development of co-patenting with the industry, the increasing participation into the development of local start-ups, all played a key role in the emergence and expansion of the info-communications era in SA. Thirdly, the presence of norms and standards institutions in SA was essential. ETSI and W3C were dedicated to favour the interaction between universities and firms, between fundamental and applied research, to elaborate new technological specifications for the high speed Internet and 3G mobile phones which were considered (and are still considered today, though not exclusively) as rapid growth segments of activities.
The case study also shows that there is a co-evolution process involving upstream and downstream companies which has to be preserved over time. Since this co-evolution process is not spontaneous and immediately set on, policy measures were also needed. In fact, despite the incredible possibilities of long distance, virtual interactions that characterize the use of information and communications technologies according to the conventional wisdom, the info-communications industry itself still clusters, and even layers. The order and pace at which the different layers are constituted is not neutral to the long term viability of companies and their local environment, and is a key policy implication to consider. In the development of this co-evolutive, layered process, local interfaces and modes of coordination were implemented in SA to favour the creation, sharing and use of knowledge among companies, between companies and education and scientific institutions, and between companies and norms and standards institutions. These local interfaces and modes of coordination took various forms which are described in detail in the case study. Let us mention three of them: the development of targeted projects centred on the development of a given technology or on the development of specific applications user-oriented in which companies, education and research institutions, as well as norms and standards institutions are jointly involved; the development of local physical and financial facilities in the creation of innovative projects and formation of new companies; the wide spectrum of local clubs and associations which favours recurrent interactions between companies (among and between layers), academic institutions, and norms and standards institutions.
A final lesson from the case study is that the economic development of a given science park can be stimulated in a mature stage, despite a chaotic evolution in earlier stages. The limited participation of large firms to the economic development in the earlier stages of SA economic development, the uncoordinated and short term decision by local public authorities, and the initial slow involvement of education and scientific institutions, progressively turned into a more focused project associated with the info-communications era since the mid 1990s. To some extent, SA recent evolution shows that the capacity of adaptation over time is sometimes as important as the initial conditions of economic development. It also suggests that a non-ideal type of economic development (compared with US and UK models of science parks) do not necessarily perform poorly in the long run.
The case study suggests that a successful combination between internal knowledge characteristics of info-communications entrants, on the one hand, and external knowledge offered in SA either by firms or on site institutions, on the other hand, has been implemented so far, and explains the local non-shakeout pattern of evolution observed since 2000. The key
5

issue is thus to know whether this process will be sustained over time, and what can be done at the policy level in order to continue to favour entry and limit exit, and to stimulate the links between companies, education and research institutions, and norms and standards institutions in a perspective of knowledge creation, sharing and use.
One of the big challenge in the next future is to adapt to new technological changes which are imposed by the global evolution of the info-communications industry, and especially by the increasing competition between Europe, the US and Asia. To some extent, the current system in the info-communications industry in SA is essentially focused on improved technologies in
Europe (ADSL for high speed Internet, transition from 2G to 3G for mobile communications), and may potentially adjust less perfectly to new technological developments coming from the US and Asia (Wireless Lans, VDSL). Since a large part of competencies of companies, education and scientific institutions, as well as norms and standards institutions, are based on the current development of established technologies, there may be important shortcomings in the implementation of a larger spectrum of different technologies involving distinct though complementary bits of knowledge. Potential coordination failures in knowledge creation, sharing and use should be assessed in the perspective of a still ongoing technology and industry transformation. Concerning this question, specific measures among the different actors of the SA info-communications are lacking at the moment, though the evolution in terms of knowledge and competencies concerns them all collectively.
What can be done at the policy level? To some extent, one the reason of the comparative performance of SA info-communications industry lies in (i) the decomposability of its structure in terms of layers, and (ii) the coordination between these separable yet complementary sets on the basis of various local interfaces which operate in conjunction. The way in which this current structure is robust to further changes highly depends on how these further changes can be considered collectively, and how this collective consciousness will turn into the transformation of bits of knowledge in a smooth manner. As a matter of fact, a concrete challenge in the policy measures lies in the usefulness to enlarge the selection of innovative projects and the creation of new start-ups to new technological opportunities, and not to relate exclusively to a series of already established technologies. The consolidation of existing knowledge is still a good opportunity for further development, but has to be complemented by the initiation of some technological diversity which is developing outside
Europe.
3.2. PLASTIC COMPONENTS AND AUTOMOTIVE INDUSTRIES
Plastics and automotive industries provide typical evidence about the bulk of the European manufacturing sector. Firstly, because these industries are more capital-intensive. Secondly, because knowledge in these industries is complex and codified. Thirdly because of the strong systemic elements at play both in manufacturing and in the generation of new knowledge. In the plastics industry, knowledge is complex since it requires a preliminary recombination of different and complementary modules of knowledge. Knowledge comes from R&D departments of large chemical firms as well as collective research centres which provide a codified knowledge tradable in the market place, from client and supplier companies issued from different industries (automotive, mechanics, agro-food and bio-medical) and a less codified knowledge via user-producer relationships. Knowledge comes also from purely tacit knowledge stemming from small plastics processors. In the automotive industry, cars
6

production requires the full understanding of the compatibilities and complementarities within a wide range of different technologies and the command of a very complex set of knowledge modules in engineering, electronics, chemistry, plastics technology, robotics, informatics and telecommunications.
In these industries, specific policy measures were developed to sustain the creation, accumulation and diffusion of knowledge. Firstly, organizational arrangements were developed in order to identify and coordinate various and dispersed bits of knowledge.
Especially, the emergence of various innovation networks composed exclusively of large companies (such as research consortia), of small-sized companies (innovation relay centres, knowledge intensive business services), or of a mix between top players and new technology based firms, was part of the process of creating a new knowledge dynamics. Secondly, and in the meantime, market arrangements were also developed. The progressive emergence of a market for knowledge in which bits of codified knowledge could be traded among different types of actors can also be considered as a key policy measure in these industries.
The policy measures implemented so far lead to a paradox. These policy measures were often dedicated to increase the interaction between different actors, each embodied with specific bits of knowledge, with different degrees of complexity and codifiability. These policy measures were also implemented in the objective of developing specific relations between companies and science-based institutions. But, as a matter of fact, the role of learning by doing is less and less relevant while scientific research activities and intimate relations with the academic community play a much stronger role.
In this perspective, differences among EU automotive companies have to be analysed in greater detail. While in some countries (Germany) the complexity in technological knowledge is large and increasing, it is only stagnant for others (France) and even low and stagnant for some countries (Italy, UK). The development of markets for knowledge, and the recognition that there exists a wide disparity between national industries in terms of i) access to this market knowledge and b) strategies in terms of complexity in patent portfolios, should further involve new modes of policy implications.
3.3. LIFE SCIENCES IN EUROPE
3.3.1. LIFE SCIENCES IN FRANCE AND BELGIUM
Life sciences regroups a large number of actors: Large multinational firms (LMFs),
Dedicated Biotechnology Firms (DBFs), Public research Institutions (PRIs), as well as public authorities (PAs) and consumer’s associations (CAs). These actors are distinct because they are each embodied with a specific kind of knowledge. In the meantime, these actors are dependent since each of them needs to access the knowledge developed by others. Large multinational firms (LMFs) are composed of a set of complementary resources dedicated to cover a large spectrum of activities worldwide, but generally integrate science-based knowledge from Dedicated Biotechnology Firms (DBFs) or Public research Institutions
(PRIs), as well as ethical, testing and control constraints emerging from public authorities and consumer’s associations. DBFs develop specialized, science-based knowledge, often in close connection with PRIs, but coordinate with LMFs as soon as globalised commercial opportunities emerge.
7

The coordination of diverse, dispersed and complex knowledge appears as a major issue in this industry. For the actors, this coordination of knowledge involved different types of organisational strategies, such as integration, cooperation, innovation networks, spinoffs, patents, international procedures for control and testing, which importantly shaped the profile of evolution of the industry. In terms of localization, the coordination of science-based knowledge which is one of the most important drivers in the industry involved processes of concentration and agglomeration of actors in some specific geographical areas. In the meantime, the globalization of life sciences, spurred by an increasing process of competition and by the internationalization of the scientists themselves, generate a new profile of evolution for the industry, less affected by localization effects. This leads to the emergence of a new knowledge dynamics, in which both local and global sources of knowledge
(‘glocalized’ sources of knowledge) play a role.
The case study suggests that acquisition of new knowledge by LMFs was significantly delayed over time, since it is only recently that they started to integrate DBFs which are now the core producers of knowledge. This initial inertia had important and durable effects.
Though LMFs are still key actors in terms of reputation, size, and R&D budgets, a new type of competition has developed which is increasingly based on exploring, combining, and adapting science opportunities and which puts at the centre stage DBFs and their innovation networks.
In the meantime, DBFs are still small compared to LMFs, and highly dependant on their production and distribution networks which are developed worldwide. To some extent, the development of local relationships between small DBFs to form innovation networks has to be complemented by the capacity to operate globally, and this generates some further changes in the evolution of the industry.
3.3.2. LIFE SCIENCES IN PACA REGION
The case study shows that the PACA region is one of the leading area in terms of innovation in France. Different criteria are used to assess this result: PACA is one of the top places in terms of the number of public researchers and public research institutions, and PACA is also highly ranked in terms of innovation service activities developed by private companies.
Moreover, within the PACA region, two poles of excellence emerge. The first one, located in
Marseille, is essentially composed of basic research institutions in life sciences; while the second one, located in Nice, regroups the highest number of private companies specialized in applied and clinical research in life sciences. These SME’s located in Nice are in direct competition with US companies operating in para-pharmaceuticals, cosmetics and dermatology, and are in close relation with customers and suppliers located in the US and
Asia. These companies are also more in contact with basic research institutions located worldwide than with local research institutions. Networking thus exists for these companies, but at the global level and not at the local one.
In both areas, basic and applied research activities are disconnected. In Marseille, despite the large number of important research institutions, only a small number of companies is created.
In Nice, there is a large number of private companies, but they have no or very few relations with basic research institutions, and also very few connections among themselves.
8

There is thus potentially a knowledge coordination failure which may alter in the future the
PACA region. To some extent, a pool of resources in basic research exists but only generates companies which operate in a domain where basic research expertise is not central. The outcome is that the two sphere of activities – the one, basic and public; and the other, applied and private – co-exist without really interacting.
Policy measures should favour at the local level the development of networks of innovation in which both applied and basic research could be more closely connected.
3.4.
THE AERONAUTICS INDUSTRY
In this case study of the aeronautics industry the focus of attention is mainly on aero-engines.
The technology and local learning and co-ordination problem essentially involves the design and implementation of a very large, complex system. The whole system comprises an aircraft but the study is concerned largely with its engines. In view of the complexity of the engines there are a large number of firms involved as contractors, sub-contractors, sub-sub contractors etc. These firms specialise in a large number of technologies. Furthermore, they also, where possible, attempt to take advantage of standardised components for reasons of cost and reliability.
As becomes immediately apparent, in this case there is a significant coordination problem that must be solved if engines that meet the overall requirements of the aircraft system are to be efficiently produced. How is this coordination problem solved?
There are two general answers to this important question. The first is the role played by what is effectively an overall Project Coordinator. This role is typically played by the lead company which produces and sells aero-engines. The second way in which coordination is achieved is via the design architecture chosen for the engines. This architecture is essentially modular.
The main advantage of a modular architecture from the point of view of technical change and local learning is that the knowledge set needed to make the engines can be divided up into relatively self-contained units, or modules. These modules are then interfaced in order to produce the overall functionality required.
This process of modularisation has particularly important consequences from a knowledge coordination point of view. For it means that those specialising in the design of one module need have minimal knowledge of the other modules. Essentially, all they need to know about the other modules is how to interface with those modules that are directly or indirectly linked.
(For example, the functionality of the materials used in a module that is not directly linked may have design implications for a particular module.) This means that the agents involved in the engine design are able to economise on their need to acquire and keep up with changes in knowledge. There is now a vast amount of literature devoted to modularisation and its implications.
The present TELL project makes more of a contribution to the first way in which knowledge is coordinated, namely the role of the Coordinator. Pioneering research incorporated into the case study relates to the knowledge of the Coordinator of aero-engines. Essentially, using
9

patent data, this research has shown that in order to play the coordination role effectively, the
Coordinator needs a larger knowledge set than all of the subcontractors. Furthermore, the
Coordinator’s knowledge set is broader than that embodied in the products involved in the system being designed.
This is a paradoxical finding. The reason is that, on the one hand, the process of knowledge creation involves both knowledge differentiation and knowledge specialisation. However, as we have seen, at least in the case of the design of complex systems such as aero-engines, differentiation and narrower specialisation needs to be accompanied by its opposite, the possession of a broader set of knowledge in order to facilitate effective coordination.
To the extent that this holds true in other situations, the policy implications following from the aero-engine case may be extremely important. Other policy implications (that, however, are more implicit in the case study write-up for the TELL project) relate to the practicalities of modes of coordination. One area here relates to the problems of contracting, both formal and implicit, that are part and parcel of the huge number of coordinating transactions that need to be undertaken between the many parties to the project. Another area relates to the relationships that have been established in the aero-engine case with the many non-firm organisations whose knowledge also contributes to the project. Examples are universities and other research institutes.
3.5.
THE FASHION INDUSTRIES: LEATHER FOOTWEAR IN PORTUGAL AND
SOUTHERN ITALY
It may be supposed that, moving from complex aero-engines to simple leather shoes, the problems of technical change, local learning and knowledge coordination become far simpler.
This belief would be erroneous. Indeed, if anything, at least in principle, the problem (if not the number of people required to produce a solution) may become more difficult.
Essentially, as the case study of the Portuguese leather shoe industry shows, this industry has gone through a process of complex transformation. The simplify, after Portugal’s accession to the European Union (and even before) the country specialised in one of the areas in which it had a resource-based comparative advantage, namely leather shoes. This comparative advantage was based on relatively cheap semi-skilled and skilled labour that enabled Portugal to compete effectively with the leading European producers at the cheaper end of the leather shoe market.
This picture was to change dramatically, however, with the entry of Asian producers (most recently China) and East European producers into this market. Furthermore, at the same time the nature of demand in the market also changed significantly. While price and quality were the main determinants of competitiveness, now a new dimension was added: fashion and, with it, branding. The only way the Portuguese leather shoe industry could survive was by entering into, and succeeding in, the fashion market for leather shoes. But this would involve the prospect of coming head-to-head with the leaders such as the well-known Italian fashion shoe designers.
But this raised further complications for the Portuguese leather shoe makers: What is
‘fashion’? And how does one go about learning what will become fashionable? As the case
10

study shows in great detail, the knowledge acquisition and coordination problems that arise in answering these two questions are both subtle and difficult.
As the authors show in illuminating detail, the solution to the fashion knowledge problem involved the re-design of the ‘innovation system’ governing the design, production, marketing and distribution of leather shoes. Specifically, a ‘fashion subsystem’ had to be added. (This is shown in Figure 5, p. 37 of the author’s paper, ‘The fashion industry on the leather filiere: production organisation, technology and creativity’.) The fashion subsystem involves the addition of colour and shape committees, schools of fashion and design, fashion trends offices, fashion media, and designers and stylists.
The problem, however, is how to co-ordinate the knowledge produced in the fashion subsystem by integrating it with the rest of the innovation system. In part the solution involves the coordination and integration of ‘gatekeepers’. As the authors point out, the userproducer relationship in the fashion leather shoe industry is mediated by what they call fashion gatekeepers. Essentially, “consumers choices and preferences [are] mediated by gatekeepers.” (p. 32) Accordingly, these fashion gatekeepers need to be integrated into the fashion innovation system, as shown in Figure 4, p.33.
Clothing industries located in Trulli and Puglia are specific examples of traditional industries located in peripheral areas. Knowledge in these industries is usually characterized by high levels of tacitness and stickiness, informal appropriability, internal cumulability, userproducer relationships, and very limited tradability. In the meantime, these two examples are also illustrative of distinct practices in terms of developing technological and localized learning which can still be activated even in mature industries. In Puglia, some specific policy measures were implemented to favour the access of local companies to external and new modules of knowledge. In Trulli, these policy measures were inexistent.
The Puglia Innovation Relay Centre played a key role in the development of a new knowledge dynamics. First, it acted as an interface which produced basic communications norms and rules among actors. Knowledge spillovers emerged progressively, and the recombination of external and more codified knowledge was also experimented in some companies. Second, the Innovation Relay Centre offered also a platform on which collective
R&D projects and R&D joint ventures were developed. In this specific area, thus, the traditional industry dynamics which combined all the characteristics of a mature domain of activity, progressively developed a new knowledge dynamics oriented towards the identification of new modules of knowledge that local companies could penetrate and further combine with their core activities.
The Puglia clothing industry, on the basis of the role played by the Innovation Relay Centre, appears as a case where policy measures made an important contribution to the implementation of a new knowledge dynamics. However, evidence is also given that this specific example is far from being considered as a general model. More generally, in places which are not located close to metropolitan and urban areas, knowledge in traditional industries essentially remains tacit and embodied in workers, and R&D both at the private and collective levels are lacking. In Trulli, for instance, no comparable policy measures were developed, even if the same type of orientations could potentially be developed.
11

This example also shows that shortcomings exist in the Puglia experience and that improvements could still be brought in. The informal network that the Innovation Relay
Centre has initiated only concerns a very limited number of companies, characterized by a high degree of technical and geographical proximity. So far, the Innovation Relay Centre thus only provides partial cumulability, partial tradability and partial collective appropriability. In a sense, the institutional framework dedicated to impulse a new knowledge dynamics does not operate at a significant level yet, in that it does not produce a significant transformation of the traditional industrial dynamics.
According to Friedrich Hayek, the economic problem arises from the need to use knowledge that no-one knows in its entirety. This expression serves as a useful way of summarising the theoretical and practical problems addressed in the TELL project.
One of Hayek’s main concerns, of course, was to show how useful markets and prices are in dealing with this economic problem. However, as the case studies examined in the TELL project clearly show, markets and prices do not provide a sufficient solution to the Hayekian economic problem. Accordingly, many of the solutions that have been devised in order to more effectively use knowledge that no-one knows in its entirety are non-market solutions that are not based on market prices. For example, while the use of modularised systems as a device to deal with the Hayekian problem certainly has a market dimension to it, the solution that it provides – as the case studies involving modularisation have shown – goes far beyond market relationships.
Emerging from the TELL project is not a list of policy suggestions intended to solve the
Hakeyian problem in the case study industries we have examined or in other industries.
Neither is there a simple typology of kinds of industries (from a technical change and learning point of view) and the optimal solutions available to them. Would that the solution to the Hayekian problem were so simple!
Rather, our main contribution to policy has been conceptual. Our contribution has been to show that the problem in the first place may fruitfully be analysed as a problem of knowledge coordination and use (and the learning that stems from the coordination and use of knowledge). By conceptualising the problem in this way, a significant break is made with more simplistic conceptualisations that abstract from the knowledge problem. By identifying the nature of the problem, we are pointing to the directions that are appropriate in searching for solutions.
However, we also insist that it is impossible to ultimately solve the Hayekian knowledge problem, although interim and partial solutions will constantly be devised. The reason, simply, is that knowledge is constantly evolving, is constantly becoming other that what it has been and human beings will always be cursed (or blessed) with possessing far less knowledge than the total sum in existence. Our power, however, lies in our ability to understand (however partially) our predicaments, and the TELL project is hopefully a very small contribution to this ability.
12