Constructing Regional Innovation Systems: Perspectives and development tendencies in European regional innovation research and policy

Professor Bjørn Asheim, Deputy Director,CIRCLE (Centre for Innovation, Research and

Competence in the Learning Economy),Lund University, Sweden.

Key note address at DIME International Workshop on‘Reconsidering the Regional Knowledge Economy’,

KITE, Newcastle, September 5th, 2008

Bjørn Asheim, 2008

CIRCLE (Centre for Innovation, Research and Competence in the Learning Economy)

New multidisciplinary centre of excellence in innovation system research at Lund University (July 2004)

CIRCLE is financed by the Swedish Agency for Innovation Systems (VINNOVA), Lund University and Blekinge Technical University 2004-2010, and from 2006 for 10 years by the Swedish Research Council (Linnaeus grant)

In autumn 2007 co-location of research and teaching in innovation and entrepreneurship together with LUIS (Lund University Innovation System) at LUCIE (Lund University Centre for Innovation and Entrepreneurship)

Becoming one of the largest centres in Europe http://www.circle.lu.se/

Bjørn Asheim, 2008

Some empirical observations I

Promoting Innovation Systems approach:

- Finland: Science and Technology Policy Council

- Sweden: VINNOVA (Swedish Governmental Agency for Innovation Systems)

Share of R&D:

- Finland: 3.5%

- Sweden: 4.0%

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Some empirical observations II

Economic performance: Global competitiveness

2004 2005 2006-7 2007-8

Finland: 1 1 2 6 Sweden: 3 3 3 4 Denmark: 5 4 4 3

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Nordic innovation strategies

The technology-based strategy of process innovations and complex product improvements, through R&D investments in large industries, characteristic of the Swedish economy

The science-driven high tech strategy focusing on radical product innovations, with Finland as the champion (NOKIA)

The market (user)-driven entrepreneurialism of Denmark characterized by non-R&D based, incremental product innovations especially within consumer goods sectors

Bjørn Asheim, 2008

Different modes of innovation

’How Europe’s Economies Learn. Coordinating Competing Models’ : Different modes of innovation and forms of work organisation

1. STI (Science, Technology, Innovation) – high-tech (science push/supply driven) - LME

2. DUI (Doing, Using, Interacting) – Competence building and organisational innovations (learning work organisation) – market/demand/user driven - CME

Bjørn Asheim, 2008

Finland’s National Innovation Strategy: New proposal

In order to meet global challenges, innovation policy must be broad-based and comprehensive:

Innovation activity in a world without borders Demand and user orientation (DUI mode of

innovation) Innovative individuals and communities

(creative class/talents) Systemic approach

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Key governance policy measures

The central government’s corporate steering renewed for the purpose of becoming a worldwide pioneer of systemic reforms:

The Science and Technology Policy Council to become a wider Research and Innovation Council (STI & DUI)

Content-oriented (strategic centres of science, technology and innovation) and regional centres of innovation (strategic strenghts of regions) driving renewal is to be formed (top down/bottom-up)

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VINNVÄXT: Regional Growth through Dynamic Regional Innovation Systems

’To promote sustainable growth in the regions based on international competitive ability, by successively developing the functioning, dynamics and effectiveness of innovation systems in functional regions’

VINNVÄXT is competition based (top-down program design)

The winners receive 10M SEK per year under a 10-year period (50% co-financing)

Focus on (potential) regional strengths Triple-Helix based Ongoing process support, education, monitoring

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What kind of support?

At least 50% R&D Development organisation and process

management Mobilisation of regional actors (bottom-up) Competence supply Brand creation Strategic work Follow-up

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What is Regional Innovation Systems (RIS) – narrow definition (STI mode):

A RIS is constituted by two sub-systems and the systemic interaction between them (and with non-local actors and agencies):

The knowledge exploration and diffusing sub-system (universities, technical colleges, R&D institutes, technology transfer agencies, business associations and finance institutions)

The knowledge exploitation sub-system (firms in regional clusters as well as their support industries (customers and suppliers))

Bjørn Asheim, 2008

What is a RIS - broad defintion (DUI-mode):

A system of organisations and institutions supporting learning and organisational innovation, and their interactions with local firms (learning regions):

Developmental (creative) learning: competence building – learning work organisation

Reproductive (adaptive) learning: interactive learning (user-producer relationships) – inter-firm networks

A market/demand/user driven system mostly generating incremental innovations

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From competitive to constructed advantage: Regional Policy Challenges in a Globalising Knowledge Economy

Imitation and adaptation is not any longer a sufficient strategy for regions in the long run (cost-based, low road strategy). Unique advantages have to be actively constructed (innovation-based, high-road strategy).

Industrial renewal takes place in-between and beyond existing sectors – need for transcending traditional sector policies (platform policy)

Innovation through combining existing knowledge, technologies and competencies with new generic technologies (IT, biotech (green and white))

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What is Constructing Regional Advantage

New regional development strategy Advocating a more pro-active and

collaborative approach Addressing system failures of weak

connectivity within and between (regional) innovation systems

Promoting innovativeness on individual and systems levels to meet challenges of the globalising knowledge economy

Bjørn Asheim, 2008

From competitive to constructed advantage

Competitive advantage: too strong focus on markets and rivelry as selection mechanisms as well as a too narrow approach to the creation of endogenous capacity of regions to learn and innovate as primarily being based on co-location of firms in clusters and by placing the state in the same peripheral position as ’chance’ in Porter’s diamond model

Constructed advantage: acknowledges more the important interplay between industrial dynamics (knowledge bases) and institutional dynamics (i.e. different knowledge bases need different kinds of institutional support) as well as private-public complementarities in policy making by a stronger focus on actors, agencies and governance forms (addressing system failures – weak connectivity within and between IS).

Bjørn Asheim, 2008

Content of policies for Constructing Regional Advantage

Proactive and trans-sectoral, platform oriented policies (transcending traditional industry or sector specific policies):

1. Related variety (spillover effects) 2. Differentiated knowledge bases (analytical,

synthetic and symbolic)3. Distributed knowledge networks4. Regional innovation systems as creative

knowledge environments

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Platform policies – Japan’s new cluster policy (2004):

Ex: Strengthening policies for advanced component/materials industries

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1) Related variety (knowledge spillover effects)

Urbanisation economies – diversity promoting creativity? However, can knowledge spillover take place between sectors that are unrelated (portfolio vs. knowledge spillover effects)?

Related variety is defined as sectors that are related in terms of shared or complementary knowledge bases and competences

Acknowledge that generic technologies have a huge impact on economic development (e.g. green and white biotech)

Related variety combines the strength of the specialisation of localisation economies and the diversity of urbanisation economies

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2) Differentiated knowledge bases (analytical, synthetic, symbolic)

Characterise the nature of the critical knowledge which the innovation activity cannot do without (hence the term ’knowledge base’ understood as an ideal type)

Makes it wrong to classify some types of knowledge as more advanced, complex, and sophisticated than other knowledge (e.g. to consider science based (analytical knowledge) as more important for innovation and competitiveness of firms and regions than engineering based (synthetic) knowledge or artistic based (symbolic) knowledge). Different knowledge bases should rather be looked upon as complementary assets (STI vs. DUI)

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Differentiated knowledge bases: A typology

Analytical (science based)

Synthetic (engineering based)

Symbolic (artistic based)

Developing new know-ledge about natural systems by applying scientific laws; know why

Applying or combining existing knowledge in new ways; know how

Creating meaning, desire, aesthetic qualities, affect, symbols, images; know who

Scientific knowledge, models, deductive

Problem-solving, custom production, inductive

Creative process

Collaboration within and between research units

Interactive learning with customers and suppliers

Learning-by-doing, in studio, project teams

Strong codified knowledge content, highly abstract, universal

Partially codified knowledge, strong tacit component, more context-specific

Importance of interpretation, creativity, cultural knowledge, implies strong context specificity

Meaning relatively constant between places

Meaning varies substantially between places

Meaning highly variable between place, class and gender

Drug development Mechanical engineering Cultural production, design, brands

Bjørn Asheim, 2008

3) Distributed knowledge networks – open innovation

More and more highly complicated More and more highly complicated combinationscombinations of of different knowledge types, e.g. codified and different knowledge types, e.g. codified and experience based, tacit knowledge, as well as experience based, tacit knowledge, as well as synthetic/analytical/symbolic knowledge basessynthetic/analytical/symbolic knowledge bases

As a result of the increasing complexity and diversity As a result of the increasing complexity and diversity of knowledge creation and innovation processes, of knowledge creation and innovation processes, firms need to acquire new, external knowledge to firms need to acquire new, external knowledge to supplement their internal, core knowledge base(s)supplement their internal, core knowledge base(s)

Transition from Transition from internalinternal knowledge base(s) within knowledge base(s) within firms to firms to distributeddistributed knowledge networks across a knowledge networks across a range of firms, industries and sectors locally and range of firms, industries and sectors locally and globallyglobally

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4) Regional Innovation Systems (RIS) as Creative Knowledge Environments

Creative knowledge Environments (CKE) are: Environments where new knowledge is generated by people,

especially in their work settings (associating to the importance of talents (the creative class) and the policy implications of people climate complementing business climate)

CKE can be found on macro- (RIS), meso- (universities/firms) and micro-levels (research groups/work organisations)

Thus, the systemic interaction between the knowledge exploration (university) and exploitation (industry) subsystems of a RIS must be understood in a broader context and be embedded also on the meso and micro organisational levels

Bjørn Asheim, 2008

Creative Knowledge Environments

CKE covers a void in innovation studies (traditionally focusing on how knowledge is exploited) by

Analyzing how creation of new knowledge occurs (i.e. on knowledge exploration), as well as

Focusing on what characterise the environments in which people carry out creative knowledge-producing activities (e.g. learning work organisations with autonomy in work and developmental (creative) learning in a RIS setting)

Bjørn Asheim, 2008

Summing up: Broad-based innovation policy

User-driven innovation in addition to science driven (DUI+STI) Knowledge creation and innovation in all types of industries with

different knowledge bases Exploitation of different modes of innovation and forms of

learning Linking firms and regions with distributed knowledge networks

locally and globally (open innovation) Achievement of related variety within and between industries

(emerging as well as traditional) Improving connectivity in regional innovation systems (RIS) to

secure knowledge creation as well as knowledge exploitation Turning RIS into creative knowledge environments Platform oriented regional innovation policies transcending

traditional science, technology and sectoral policies

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Principles of policiesTypes of Policy

Indirect, general(framework cond.)

Direct, general

Direct,specific

Science policy Basic research in universities and research institutes/ (T-H) - IPR policy

Technology policy

Specific ‘strategic’ technologies and sectors - public procurement policy

Innovation policy

SkatteFUNN(tax relief) -Norway

Vinnväxt (T-H)/

VINNOVA –

Sweden (CRA)

TYPOLOGY OF POLICIESTYPOLOGY OF POLICIES