Innovation Systems in Economic Development by Paul Benneworth

Innovation systems in economic development: developing dynamic social networks

Dr. Paul BenneworthCenter for Higher Education Policy Studies (CHEPS), University of Twente, the Netherlands.

Paper presented to Cities as seedbeds for innovation, International Conference of Indonesian Development, Erasmus ISS, the Hague, 12th-14th September 2013.

AcknowledgementsOECD Regional Innovation

Strategy Project◦All comments on a personal basis

Conference OrganisersConference Sponsors & Hosts

Introduction & OverviewEconomic development and

innovation communitiesImportance of global-local

connectivity to driving economic upgrading

Identifying & promoting sites of innovative networking

Towards a new policy framework for stimulating dynamic innovation networks

INNOVATION COMMUNITIES AND ECONOMIC DEVELOPMENT

Part I

The innovation imperative

It is Indonesia’s capacity to innovate that will drive productivity growth, and lead to a tripling of GDP by 2025, and not natural resources.

Dr. Lukita D Tuwo, Vice Minister of National Planning and Development, ICID Conference, 13th September 2013.

Innovation, economic growth & proximity: an orthodox viewIncreasing importance of

innovation to economic development

Innovation based on creating/ exploiting new knowledge combinations

Creating new combinations involves knowledge exchange between people

Effectiveness of knowledge exchange requires proximity of exchanging actors

Innovation communities

Source: Gertner et al. (2010)

Community of Practice

Knowledge Producer

(university/ academics)

Knowledge Exploiter

(firm/ researcher)

(Inter)national technology transfer

associations – AUTM, AURIL, AIRTO

(Inter)national policy

communities: EU, OECD, UNU

Research Funders

Publishing Outlets

Ranking organisations

Learned societies

Research Partners

R&D Services e.g. Metrology

Research Partners

Research Subsidisers

CorporatePartners

Suppliers & customers R&D

Services e.g. Metrology

Standards’ bodies

Knowledge linkages in CoPs

Local sites, global knowledgesLocal spaces of knowledge

combination◦People critical – roles shift, networks

growOften emphasis on local sites

◦Global networks equally importantFrom ‘everything everywhere’ to

locally situated knowledge◦Certain activities host global-local

communitiesGlobal-local anchors connect &

embed◦Creating innovative opportunities

locally

GLOBAL-LOCAL CONNECTIVITY & ECONOMIC UPGRADING

Part II

Economic development as a connectivity challengeInnovation success network-

dependent◦Anchoring innovation communities

locallyEconomic upgrading raising

performance◦Better using assets new

opportunities Evolution – creating/ exploiting

new paths◦New combinations and potentials?

Where are the network ‘structural holes’◦Where to focus policy efforts?

Two variables describing connectivity

A1

A2 A4

A3

a. Isolated

G1 G2G3

A1

A2 A4

H1

b. Single Hinge

G1 G2

G3

Region Region

c. Multiple Hinge

G1 G2

G3

Region H3

H4

H1

H1

A1

A2 A4A3

a. Centralised

A1

A2 A4

A3

b. Dense decentralised

A1

A2 A4A3

c. Sparse decentralised

a. Centrality (internal connectivity)

b. Hinge Linkages (external connectivity)

No Hinges

Single Hinge (opp)

Single Hinge (alt)

Diverse Hinges

Centralised Decentralised Dense Decentralised Sparse

Typology of network connectivities

SITES OF INNOVATIVE GLOBAL-LOCAL NETWORKING

Part III

Key Hinges building connectivity

Type of hinge activity

Hinge activity stimulating local connectivity

Hinge activity stimulating global connectivity

Large-hub firm Encouraging cluster-building and knowledge circles between MNC and SMEs

Subsidies for R&D with world-leading research activities elsewhere

Related diversity firm activities

Supporting cross-sectoral shared innovation projects and networking activities

Encouraging local firms in sourcing knowledge from world-leading institutes

Cluster-firm network-industrial district

Upgrading the innovation capacities of local businesses in the industrial district

Marketing the collective capacity of the local entity globally, building up a global industrial district brand

Relay centres Innovation vouchers to help SMEs access knowledge located elsewhere

Mentoring schemes to help local firms to absorb knowledge created elsewhere

Universities & public RTD infrastructure

Technology transfer office helping local SMEs to identify knowledge needs and absorb university knowledge

Supporting participation in collaborative, multinational innovation and research projects pursuing global excellence

Physical infrastructure

Upgrading local/ regional accessibility and feeder infrastructure to support its wider role

Affirming the importance of the place as a centre of particular transport/ distribution networks with other public policies

Epistemic communities

Supporting post-qualification education for local agents on basis of external standards (e.g. MBA)

Overseas visits and delegations to build connections with people in similar situations elsewhere

Source: Benneworth & Dassen, 2011.

.

Typology of innovation dynamics

Building local clusters

(Diversifying local supply

chains)

Addressing peripherality:

building global

connections

Sustaining critical mass and world-

leading position

Improving global

profiling & markets

Global Connectivity

High

High

Low

Low

Local density

Four kinds of connectivity repertoire

Connecting globally (red): Building a global pipeline: finding a point of connection from the region to key global actors

Cluster-building (blue): Improving local networking to connect more local actors into the growing regional network

Sustaining momentum (yellow): Building up new regional hinges with connections to regional firms – building critical mass.

Deepening pipelines (green): extending hinge connectivity & networks around hub

4 different ‘flavours of science park’ Regions lacking global hinges, science parks

as technology poles, global actor ‘soft landing’ programmes for foreign R&D investors, with connections to regional actors (cf. Crete Innovation Pole, IRE, 2008).

IF good local networks, some global connections, then science park a physical space for networking, building critical mass between actors.

Science parks can stimulate cluster-building, acting as innovation promotion centres, (IDEON in Lund) and providing physical links to universities.

Where there are strong regional connections, science parks can consolidate relationships between local firms, build wider innovation profile (Wicksteed, 2000).

TOWARDS A NEW INNOVATION POLICY FRAMEWORK

Part IV

An Indonesian Inspiration?

A company based in Jakarta, with Global and US patents, based on research in the US and Spain, spun-out from an Indonesian university

Dr. Warsito P. Taruno, Founder of Edward Technology Company

The new innovation policy paradigmGlobal local innovation

◦EU/ OECD Smart Specialisation◦Constructed regional advantage

Identifying local opportunities◦Connections to global value chains◦Existing innovation assets◦Opportunities for unique regional

activitiesSo why is every region building a

life sciences cluster?

A guiding rule for policy-makers“Regional authorities and

government agencies should not be paying excessive attention to building regional capability without carefully assessing and understanding the kinds of GPNs with which the region can have a good chance of strategic capacity” (Yeung, 2006, p. 31).

Problems in developing policy Connecting globally: in these regions, the difficulty lies in

understanding which latent and potentially externally-networked actors have the potential to be worth supporting as the basis for a better connected knowledge economy.

Cluster-building: the greatest issue here is in distinguishing between the different global connectivities of the latent and actual micro-clusters that exist in the region, and in particular in identifying which clusters are to be prioritised.

Sustaining momentum: the greatest issue in these regions is in addressing complacency and creating a sense of urgency; it is easy to have a politically desirable strategy and to describe it as a global-local perspective than to challenge the existing order.

Deepening pipelines: the clear difficulty here is in getting round the existing lead partners who dominate regional discussions and are able to configure strategy and policy outcomes to their own benefit.

Challenges for emerging economies

  CLUSTER-BUILDING1. Improve innovation governance

Identifying regional pockets of excellence & opportunities for related-variety spill-over effects.

2. Foster an innovation friendly environment

Encouraging local co-operation to build mutual trust

3. Human Capital Development

Universities leading micro-clusters as honest brokers; Supporting market research, technology analysis of cluster shared needs; Creating entrepreneurial labour market with business experience; Technology clubs etc.

4. Development of Research Infrastructure

Shared R&D facilities; Use of university/ PRO/ Technology Centre as broker

5. a) Strengthen innovation in the SME sector

Signposting services to reduce effort necessary for SMEs to access innovation resources.

5. b) Industrial policy and strategic technology policy

Helping local businesses to fit into supply chains: ISO9001, industry standards; new products into existing markets; supporting proof-of-concept innovation projects

6. Develop innovation poles and clusters

Brokerage: matchmaking, introductions, sign-posting, creating regional knowledge database; Industrial knowledge circles – technology clubs with lead actors involved.

7. Promote and sustain creation and growth of innovative enterprises

Creating supportive spaces for new high-technology businesses; Support in accessing external knowledge sources; Ready provision of high-technology entrepreneurship resources (finance, IP, skills)