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1996 1: 51Science Technology SocietyStephen C. Hill

Globalism of TechnologyOpportunity as Developing Countries from the New Small Player Advantage in a New Game: Capturing

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Small Player Advantage in a New Game:Capturing Opportunity as DevelopingCountries from the New Globalism

of Technology

STEPHEN C. HILL

Stephen C. Hill is Director, UNESCO Regional Office—Jakarta, J.L.M.H. Thamsin14, Tromolpos 1273/JKT, Jakarta, 10012, Indonesia.

As the world moves towards the twenty-first century, developing nations are confrontedwith a complex and challenging paradigmatic shift in the way that technologicalprocess is becoming embedded in the globalised economic framework of develop-ment. There is a perceptible shift taking place from economic power being derivedfrom nationally owned production facilities to economic power being derived fromthe national location of high value-added activities.As developing countries are opening up, there is a greater incidence, than ever

before, to transfer advanced technological processes and know-how to the developingpartners as a part of the global networking strategies. As opposed to the earlierstrategies, these new networking strategies seek to encourage establishment of locallybased research, development and design facilities to meet both the local and inter-ndtional demand for increasingly sophisticated spectrum of products. Developingnations stand to capture and gain from these advantages provided their structures areequipped to bed these new knowledge capacities into their national technologystrategies. There is a series of various factor advantages behind these new demands ofeconomic competition.At the heart of capturing value-added advantage from the new economic and

technological order lies the whole spectrum of reordering the S&T skill base includingthe educational system which seeks to develop more strategically informed inter- andmultidisciplinary S&T programmes. Entirely different principles of science andtechnology policies are implied which focus on the development and flow of peopleembedding national SBcT advance into aligned social and organisational strategies.

What is the role of a nation within the emerging global economy, inwhich borders are ceasing to exist? Rather than increase the profitabilityof corporations flying the flag, or enlarge the worldwide holdings of itscitizens, a nation’s economic role is to improve its citizens’ standard ofliving by enhancing the value of what they contribute to the world

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economy. The concern over national competitiveness is often misplaced.It is not what we own that counts; it is what we do.

Robert Reich (1991)’

UNDERLYING THIS CONCLUSION by Robert Reich is a paradigm shiftin the way that technology is understood to relate to economicdevelopment as the world moves towards the twenty-first century.This is a shift from economic power being derived from nationallyowned production facilities to economic power being derived fromthe national location of high value-added activities.2 It is, of course,difficult to refute the fact that national and concentrated owner-

ship has remained significant in global economic affairs.Within the global economy, a small number of multinational

corporations (MNCs) persist in their dominance of the world

economy and in their ability to capture the leading edge of scientificand technological change and to translate this into economicadvantage. This is particularly the case in research intensive hightechnology activities. The OECD, for example, estimated that(based on 1987 data) the top ten firms in computers contributed 90per cent of the world output; 85 per cent in telecommunications;and 61 per cent in semiconductors. In automobiles the top sevenfirms contributed 88 per cent of global output; and in tyres, the topsix firms contributed 88 per cent (OECD 1992). Within the elec-tronics and information technology industry, there is considerableconcentration both of ownership and national base with sevenMNCs (all Japan based) dominating two or more of the compon-ents, computers and consumer electronics sectors (in 1989-90);with Japan, the United States and Europe dominating all top tencompanies in each of these sectors, the singular exception beingKorea which has now raised Samsung and Gold Star to ninth andtenth positions on the consumer electronics list (CEC 1991).However, in spite of these statistics of national dominance, new

trends are emerging in the way that MNCs have found it profitableto operate. Until recently, the less developed economies had pur-chased high value-added goods from a few technologically elitecountries and the 1vlNCs that represented them. Aligned with thissame valence of power, global corporations were competitivelysuccessful by breaking up the production process intemationally-maintaining high value-added activities close to their home baseand garnering the cheapest labour for low value-added fabricationactivities from the most compliant and least wealthy developing

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countries. This was a strategy based on the mercantilist ’ownership’view of technology and economic advantage. For the developingcountry, the strategy provided a Faustian bargain: immediateemployment and economic wealth, but, without the nation’s abilityto capture the technological capability and knowledge; in otherwords, only a short-term advantage. As wealth increased, thelabour costs of less wealthy countries attracted the MNCs awayfrom Taiwan to Malaysia and Thailand to China and Vietnam.Developing countries have captured little of the technologicalvalue-added capability of the MNCs, as this was never transferredin the first place.However, the globalisation of integrating technological know-

how into production has been eroding nationally based competitiveadvantage. Until about ten years ago, vertically integrated MNCsdominated the introduction of new technology (Sony and Philipsin the case of compact disks). Increasingly today, global networksinterlink corporations in the production of a single product. In theaircraft industry, for example, Boeing, despite its reputation as anAmerican company, produces only 15 per cent of the componentsthat make up its aircraft in the United States. In fact, the UnitedStates only provides the assembly site, and the company acts as aproduction manager for what is essentially a globally producedaircraft. Thus, components for Boeing are manufactured in, forexample, both Indonesia and Australia under competitive contracts(Hill et al. 1994). Consequently, as Michael Porter observed, withactivities and responsibilities spread across many parts of the world,the traditional notion of a single powerful centre of corporatecontrol is no longer accurate (Porter 1990: 53-54).

Japanese firms, faced with intense domestic competition and arestructuring of their economy, have been leaders in this trend,seeking over the last few years to establish strategic control of theAsian market through regional networks for the production of highvalue-added goods. A major shift in cross-national transfers ofmobile capital resulted, with Japan and Japanese MNCs providingthe lead as the major source. The networks involve new forms oflinkage between firms: joint ventures, subcontracting, licensing,cooperative research agreements and second sourcing. The resultis that ’many firms are now involved in a complex web of agree-ments in many of their main areas of operation-research, produc-tion and marketing.’3

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The networking strategy involves transfer of advanced tech-nology and know-how to the less developed partner, a potentiallyhigh risk strategy as it accelerates the development of possiblecompetitors. Yet, the strategy is necessary to gain local competitiveadvantage by compressing and speeding up the traditional com-mercialisation process. Speed in knowledge transfer to remoteproduction facilities is fundamental to the new global competitive-ness. Survival, in the long-term, now requires the capability todeliver high quality, small batch products customised to localneeds.’ ’Giving away’ technological know-how and nurturing ofoffshore technical skills are essential elements of this strategy. Thecorporation remains ahead of competition simply by being fasteron its feet rather than by locking up its technological secrets in anintellectual property vault, particularly in leading edge industries.As opposed to the previous national ownership centred strategy,the 1990s global networking strategy should encourage the estab-lishment of locally based research, development and design facilitiesto meet the local demand for increasingly sophisticated products.Developing nations will, however, capture this advantage only ifthey are equipped to weave these knowledge enhancing capabilitiesinto their national technology strategies.

The New ’Small Player’ Advantage

There is a series of technological and cultural factor advantagesbehind these new demands of economic competition. For developingnations to capture the ’butterfly’ of globalised technological know-ledge it is important that their technology strategies encompassboth these technological and socio-cultural factors. Key ingredientsin the development of the new global competitiveness formula are:

l. A shift in process technologies from mechanical to electroniccontrol has allowed the competitiveness- of complex non-standardised production to supersede the prior advantage ofstandardised mass production.

2. In parallel, consumer preferences have shifted towards amore specialised and customised demand.

3. Communications and information flows have changed.Advances in information technology allow highly specific

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and timely linkage between production demands of largecompanies and small supplier capabilities: fax and otherelectronic communication close the physical distance/timegap between the firm and its customers.

4. The complexity of required information ensures that flat andsmall organisational structures perform more flexibly andresponsively than large corporations.’

The key to customised market sensitive technologically sophis-ticated competitive advantage in the 1990s is responsiveness.Responsiveness requires both well developed technological andsocial capabilities. In this context, corporations have to be able tomove fast-to sense new market opportunities and strategic inven-tions and innovations early and address the market by puttingemerging technologies into production very rapidly. In the computerindustry, for example, the window of opportunity for many pro-ducts is likely to be three months wide and two years ahead ofcurrent production; meanwhile the obsolescence rate of currentsoftware and hardware skills is likely to be approximately two tothree, and four to five years, respectively. Hewlett-Packard, forexample, earns two-thirds of its revenue from products developedin the last two to three years.’

Small companies, able to avoid the retarding effects of size andinstitutional inertia, have been able to capitalise on the advantagesof innovating rapidly. In spite of the assumed economies of scale inthe last global era, small companies were, like mosquitoes on abalmy evening, beginning to cause considerable irritation to estab-lished business practice-in some cases, threatening the giants’very existence. For example, two small computer companies, SUNand MIPS in the United States put the giant IBM under siegefollowing the development and diffusion of RISC (Reduced Instruc-tion Set Computes) through extensive licensing agreements andcooperation with programmers and producers who otherwise wouldbe competitors.&dquo; IBM in this case resisted the development ofRISC even though it had been involved in the early developmentof the technology. RISC, applied particularly in computer workstations, isolates core processing from peripheral processing, usingsoftware to fulfil peripheral tasks previously handled by hardware.For IBM far too much was at stake in initiating a move into RISCfrom potential competition with its previous mainline products.

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The competitive edge of SUN and MIPS came as much howeverfrom a social innovation as from technological ingenuity, frombreaking the ’normal’ competitive rules. They gave away licencesto others, creating a ’swarming effect’ around an emergent design.The exercise of tight ownership control simply does not work anymore in these rapidly moving high tech areas. SONY, to its detri-ment, learnt this when it failed to hold onto the video market

through its strategy of restricting access by others to the company’sBeta design. The most basic reason why control through ownershipdoes not work is the nature of technological change itself. Tech-nological advance in leading edge industries is immensely complexand rapid. New, perhaps relatively small, technological innovationscan sweep from ’side-field’, or from other areas of the marketplace to eliminate the competitive advantage of dominant players,as was the case with both IBM and SONY.

Large pace setting companies have responded structurally bymoving towards the more open global networks noted earlier,where the corporations selectively share control, technology andmarkets with organisations beyond their formal structure. Smallfirms can nest into these open structures and provide the responsivespeed that today’s more customised demand requires and whichlarger organisations cannot deliver. Some large companies, such asthe electronics giant Kyocera of Japan, have themselves sought totransform into networks or ’clusters’ of small organisations; theproduction department of Kyocera has been restructured into 200self-managing and financing teams or ’amoebae’, as they are called,which change their shape and size according to demand.’ For thesmall responsive firm, cooperative arrangements with other firmscreate a new and sustainable organisational ecology (Mathews1992). By entering into contractual relations with each other,creating an internal quasi-market, they eliminate the need for top-down production scheduling and achieve an extraordinary highlevel of flexibility. An example of such small company clustering isan Australian group, Technical and Computer Graphics (TCG):

TCG is a small group of 24 companies based in Sydney. Theycollectively have a staff of 200 and a turnover of $(A) 43million. This network or cluster of companies has grown rapidlyto become the largest privately owned computer services oper-ation in Australia. TCG has perfected a form of commercialcontracting between members of the group, and of product

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development that make them extremely flexible and responsiveto market demands and changes. Because their basic structureconsists of small highly motivated companies they have beenable to be highly innovative while maintaining a low coststructure.9

In Australia, a very small player in the global economy, recentdata demonstrate that the leading edge of the national value-added export drive is commanded by 700 small and medium-sizedcompanies (SMEs).’° The same SME trend is observed in theUnited Kingdom, the United States, a number of European countriesand Japan (Sengenberger et al. 1990). Moving further into Asia,SME strategies lie at the core of the powerful arc of Chinesebusiness influence throughout the entire region, particularly origi-nating from Taiwan where the SME strategy is conscious, andsupported by public R&D organisations with the express purposeof spinning off small industries while facilitating the transfer andassimilation of advanced technologies across ten targeted industriesfrom semiconductors to health care (Wade 1990: 107-108). Further-more, across Asian countries (both the ’tigers’ and the developingcountries) SMEs play a highly significant role in national economicwealth: in Indonesia, for example, in spite of the apparent dominanceof the large conglomerates, much of the real manufacturing innov-ation that is driving the Indonesian economy to consistent highgrowth levels is produced by small to medium-sized firms.&dquo; Theglobal market place and aligned corporate strategies are thereforeundergoing radical change as we approach the twenty-first century.The successful business culture of the 1990s is one that can reach

sensitively and deeply into global markets for the particular nichethe firm can service, and can rapidly capture and exploit theknowledge that is needed to produce the appropriately tailoredand quality product on time. Central to success is the efficientlinkages that expedite these rapid knowledge flows, and innovative-ness to use both technical and social information most effectively.

The New Technological and Scientific Orders

It is critical to realise that to capture advantage of these globalchanges necessitates a clear-cut assessment of what technology andtechnology transfer is. Under the previous ’mercantilist’ economic

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regime of thought where ownership of embodied knowledge ruledcompetitiveness, the assumption was that technological capabilitywas basically to do with capture and control of codified scientificand engineering knowledge. Such a view does not work any morewhen the economic competitive edge lies increasingly close to theproduction of complex multifaceted technological knowledge.Technology is by definition, humanly derived knowledge, accord-ing to the original Greek definition; it literally means ’words ofknowledge’ about the practical arts. Most importantly, the culturalroots of the Greek meaning are deeply planted in ancient Greeksociety which emphasised human engagement in a world that thepeople craft, transform and gain knowledge about (Hill 1988:37-38). Until recently, the critical importance of the human side oftechnical knowledge was not adequately appreciated. What is

happening in business practice in the 1990s is a rediscovery of thecritical significance of human engagement in technology develop-ment and transfers. It is clear that technology is complex, multi-dimensional and specific to a particular firm. A large part oftechnological capability is tacit (that is, uncodifiable) knowledgethat derives from trial, error and learning, rather than from thesystematic application of science based knowledge. Technologicaldevelopment is therefore cumulative in nature, derived from

’learning by doing’, whilst search is localised (Sharp and Pavitt1993: 130). People and their skills are at the heart of transfer;efficient social organisation to capture technical knowledge at thelocal firm level and rapidly relate it to social demand is equallyimportant.

Capturing technological advantage over the last ten years hasalso been set against a very slippery slope of change in the natureof scientific knowledge itself. Under the stimulation of a marketplace that has been increasingly striving toward leading edge scien-tific breakthrough, the way that scientific knowledge is constitutedhas been moving very rapidly indeed, not only in pace, but morefundamentally, in kind. The driving dynamic at the forefront ofnew scientific knowledge today is what could be described as a’multi-type complexity’. This implies that not only more than onescientific ’discipline’ is involved in problem solutions but alsodifferent kinds of knowledge, both explicit and tacit; for example,concerning production or market parameters, knowing how tolaterally connect ideas from other fields and discourses. In many

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leading edge scientific fields it is relatively meaningless to distin-guish between basic and applied research, as the basic researchproblem is set within industrial application interests and parameters(such as in biotechnology and electronics).12 In the successfullyinnovative small firm, the tailoring of a ’range of complex know-ledge inputs to specific needs and the rapid undistorted translationof messages is of crucial importance: advantage lies therefore inimmediacy of relations and’ communication. At the forefront ofscientific enterprise, because of the ’multi-type’ complexity ofknowledge, the same dynamic appears to increasingly apply. Anumber of ways in which this dynamic is revealed may be summar-ised as follows

’

1. Disciplines appear to have increasingly less relevance indriving research fields. The majority of research is now

published across disciplinary boundaries. For example, anexamination of Australian research outputs, as recorded inISI listed journal entries, revealed that 65 per cent of physicsand earth sciences department research is published outsideof the fields of physics and earth sciences; 77 per cent ofinformation science is published outside the field of inform-ation science; and 56 per cent of mathematicians publish innon-mathematics journals (Bourke and Butler 1993). Similarresults were observed in a university system-wide survey ofall publication outputs for 1991 in Australia conducted bythe Centre for Research Policy: for example, psychologypublications were spread across 49 disciplinary fields, clinicalsciences across 43, and biological sciences across 38 otherfields of research. 14

2. Furthermore, there are 880 research centres throughout theAustralian university system, most of them quite real--interms of staffing and external finance indicators, a largenumber of them recent (56 per cent being established overthe last four years), and by far the majority are multidiscipli-nary. Collectively, research centres account for at least 50per cent off Australia’s tertiary education research.’S

3. Personal networks and immediate personal relations appearto be of crucial importance at the leading edge of newfields-which, as with, for example, membrane technologyor intelligent materials, emerge and dissolve through network

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relations rather as do ’self-organising systems’ described in’chaos theory’. Networks and speed of communication areinterlinked: the dynamic force behind computer scienceresearch is, for example, network membership and perform-ance, not publication; turnaround time for new ideas anddata in one international network we tapped was 10 minutes.Physics has developed a series of electronic bulletin boards(such as HEP-TH, ’high energy physics-theory’) as theprimary means of immediate (and non-referred) communi-cation of results (Taubes 1993: 1247-48). Speed and networksare self-reinforcing. The complexity of required knowledgeinputs is dealt with through multidisciplinary teams, thesuccess of which is likely to be associated with relativelysmall size-five to twelve members (see Martin 1990; Johnstonet al. 1993). Woven right through this patchwork quilt ofobservations is the critical importance of communicationimmediacy.

The impact of communication immediacy is that where leadingedge research is successfully joined to innovative enterprise the’game’ is rather more that of a ’basketball’ match than a ’relayrace’ as Michael Gibbons, Director of Sussex University’s SciencePolicy Research Unit has observed.l6 In other words, the traditionalview of the application of knowledge has been that basic researchcould lead to applied research, thence development and economicwealth, the ’idea’ being passed on as it were like a baton in a relayrace. The new order involves many actors, researchers, firms,universities, governments and so on; basic research is often a

product of highly focused applied research rather than the otherway around, and most leading edge research is likely to be teambased and multidisciplinary. In the new order the key is networkingand immediacy-being there!1’

Capturing the Key Dynamics of Competitive Technological Advantageinto S&T Policies of Developing Countries

The 1990s have heralded a new order in national economic andtechnological competition. The S&T policies of developing nations

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must take this emerging order into account in order to capitaliseon the dynamic economic growth that the 1980s have delivered forthem. Consequently, whilst many national governments look to-wards success of the ’tigers’ of Asia, or ’Dynamic Asian Economies’as OECD terms them, these are lessons of the past, not necessarilyof the future. In the context of current global change, looking backat the principles that nurtured the growth of Asia’s ’tigers’ andseeking to emulate these principles further-in either the ’tigers’themselves or in developing countries of the region-is likely tospell doom for these nations as they slide increasingly backwardsin the economic world of the twenty-first century. The world haschanged. Some key principles to be incorporated in the S&T

policy in the 1990s are discussed in the following.

Combined Technological and Social Capability

At the heart of capturing value-added advantage from the neweconomic and technological order lies the upgradation of scientificand technological skill. This is basic to the S&T developmentstrategies of many developing countries, particularly Asia. Whattends to be missing, however, is the linking of technological skillwith social and organisational skill. Developing nations, therefore,would do well to look critically at their education systems andstrive to develop more socially informed, multidisciplinary andteam based S&T programmes. In parallel it should also be recog-nised that across many developing countries, while there may becurrently major efforts being devoted to human resource devel-opment in new areas of science and technology, often the infra-structure support for the work of these people is still seriously’lacking. Even large investments of finance into research projectsin high tech industrial areas will fail if the institutions cannot

adequately absorb them. In my own experience, what looks on thesurface like leading edge high technology research can often inpractice be something else. Biotechnology is a case in point. InAsian countries, with which I am familiar, biotechnology researchoften rests in agriculturally-oriented programmes and interests,though in rhetoric the research is targeted towards new high tech-nology industry objectives. The reason is that the institutions andthe research cultures have not changed. Building new strengths,

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therefore, implies building institutional capabilities, teams andorganisational cultures, not just training people (Hill 1992).

Articulating National and Firm Level Innovation Systems

Futhermore, building national innovation strength requires arti-culating the broader innovation and regulatory system effectivelywith private sector needs, ensuring two-way flow of people andknowledge between sectors, and infrastructure support that is

targeted to providing appropriate background support for industrialinnovation. As Chris Freeman (1987:3) observed, ’The rate oftechnical change in any country and the effectiveness of companiesin world competition ... depend upon the way in which availableresources are managed and organised both at enterprise and at thenational level’. Sharp and Galimberti (1993: 65), following Free-man’s (1987) work to explore the specific case of European bio-technology companies, reached the same conclusion about theinterdependence of firm based system and national system:

The dowelopment of biotechnology, for example, required acloseness of relationship between the development/productionactivities and regulating institutions and bodies outside the firm.As long as this closeness existed as, for example, between ICIand the academic base in the UK, diffusion proceeded steadily.When such a relationship could not exist, or when relationshipsbroke down, as happened, for example, with Bayer and CibaGeigy and the regulatory framework in Germany and Switzer-land, then we see the companies moving R&D and productionactivities abroad.

Setting priorities for scarce R&D resources to support industry (asdistinct from transferring commercialisable technology to industry) isimportant; so also is paying attention to bridging the boundariesbetween institutional structures within the overall national innov-ation system.&dquo; It should be remembered here that the solutionsmost appropriate to one developing country may not necessarilybe applicable to others. The development of linkages, crossinginstitutional boundaries, social innovation, etc. are all cultural

processes. They must be grown; they cannot lJe transplanted froman alien cultural environment.

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Personal Mobility and Networks

In building an articulated public/private sector innovation system,it must be reiterated that one cannot assume any more that transfersof embodied technology will be effective as the primary vehicle oftechnological upgrading of economic growth. What is important inthe 1990s is the transfer of both the embodied technological know-ledge-in machines, artefacts, and so on, plus the transfer ofuncodified capability-in people’s tacit knowledge about the tech-nologies as well as the social means by which they can be captured.There is strong international evidence that transfers between publicsector research and private enterprise commercialisation of thisresearch are also led by this same dynamic-the movement ofpeople and the establishment of broad ranging personal networks.A recent survey by Richard Nelson, for example, of R&D Directorsof more than 600 US industrial companies demonstrated thatthree-quarters of the most important contributions of academicresearch to technological development were in the form of uncodi-fied knowledge and skill transfers, and only one-quarter in theform of codified (or tacit) knowledge, that is, patents, machines,research papers, etc. While codified knowledge transfers tended tocome from more applied disciplines such as computer science,materials science or metallurgy, and were applied in very fewindustries, the useful uncodified knowledge and skills came from awider range of disciplines and had a much broader impact (Nelson1987). Similarly, gaining access to leading edge science follows thesame dynamic: standing at a distance and depending on the liter-ature is a recipe for obsolescence. The game is now about ’im-mediacy’ and personal networks. What matters is the movement ofpeople, for it is through this personal mobility that there will beleakages of public benefits across national boundaries; with theright capturing mechanisms, any country can therefore ’free-ride’on the advances in research made by others.

Consequently, at all levels, technological strategies of developingnations need to emphasise the movement of people and the devel-opment of networks-across national boundaries in both scientificand technological ventures, and nationally, in relations betweenpublic sector research and private sector commercialisation. Ourwork in Australia demonstrates clearly that to build liaison orcommercialisation structures to bridge public and private sectors,

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will, if used as the basis for driving rather than supporting personalrelations, simply get in the way.’~ It follows also that developingnations may view ’brain drain’ of their key S&T personnel from anew angle. While in laboratories and companies close to the heart-land of new S&T frontiers, these people could be of enormousvalue to transfers of knowledge back to the home developingcountry. Perhaps, rather than making efforts to lure such peopleback home permanently, developing nation S&T policies shouldseek to capitalise on frequent movement between the internationaland national contexts, and counterparting the people at home.

A New Role for National Research Systems

In this context national research systems generally require a newperspective. It is the goal of many developing nations’ strategies inthe 1990s, along with the majority of advanced nations, to increaseprivate sector research activity. Given a low S&T base in industryin developing nations, deep MNC penetration into the economy,and ambiguous incentives, these plans may well be unrealistic. In adeveloping country context the public sector will probably alwaysbe required to play a dominant role in economic development. Itwill best service this role, however, not by merely seeking totransfer commercial products from the public to the private sector-as this is likely to have little impact in the global economic context-but by seeking to galvanise the ’learning-by-doing’ and innovativesocial and technological capabilities within the private sector.’Research that is most likely to succeed is one that is linked to theprivate sector context at its outset rather than adjusted later. Inmost cases across developing nations, such strategies necessitatediscarding ’old models’ of perceiving public/private sector linkages,for these in general assume the usefulness of the public sector intransferring embodied knowledge rather than stimulating nationalcapacity to absorb uncodified knowledge. Often, these old modelsseek to emulate observed practice in the United States or Europe,neglecting to identify the most important environmental factor inthese advanced countries which is that the commercial environmentis likely to be relatively rich in technological capability to absorbproducts of public enterprise research (Hill 1987). Again, newmodels imply the movement of people and close interactions

between the public and the private sectors-to build webs of

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relationships that influence research chosen, industrial perspectives,educational curricula, contracts negotiated, consultancies awarded,etc.

Support of Small and Medium Industries

There are new opportunities for the small player-both at the firmand the national level-that are emerging within the 1990s’ globalmarket place. The key for capitalising on small player advantagelies in promoting small and innovative firms that can reach deeplyand responsively into remote markets whilst capturing technologicalknowledge through immediate organisational relations. The link-ages between SMEs and national knowledge generating resources,however, are weak in developing nations. The fault lies on bothsides of the public/private sector divide. Many SMEs operate withvery low levels of formal education skill; their technological strat-egies are likely to be largely -those of adopting unopened techno-logical ’boxes’ rather, than selecting, de-constructing, adapting,improving and ’learning-by-doing’. Both absence of ’learning-by-doing’ and thinness of the supply line of knowledge generatingcapability from the public sector should be major causes for concernin the S&T policy of developing countries.

Key Areas for Regional Cooperation

It should also be recognised that the more successful emergingnations in Asia, to which many other developing nations mayrefer, partly because of the sheer success of their economic growthover the past two decades, are also confronting a series of obstaclesto sustain their continuing development. Two of the most importantobstacles concern environmental sustainability of industrial devel-opment and quality control/standards. Environmental concernsfigure on the agenda for national action, not necessarily for inter-national altruistic reasons (when developing nations look at thehigh pollution created by the most developed countries now seekingto control those that have not yet reached this status), but forpragmatic reasons. With enhanced lifestyle that results from eco-nomic success, environmental issues enter the political agenda;with environmental ’labelling’ and standards now being developedand implemented by the OECD countries-particularly with the

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emerging ISO 14,000 environmental standards-trade boycotts forpolluting industries are a real possibility. This is one area whereinternational S&T collaboration across developing countries andregions could be of critical importance (Hill et al. 1994). Further-more, the very success of development also produces severe strainsbehind the leading edge of economic growth. Very often, theintroduction of more sophisticated means of production into anestablished industry eliminated the suppliers already there, becausethe gap in quality control and technical standards is too vast (Hill1986). The issue of exploring quality control and standards throughthe entire economic fabric of the nation-well behind the leadingedge of S&T industry-is of critical importance in holding theeconomy and its distribution of wealth together behind the leadingedge of international S&T capture within the global economy.Again, there is considerable scope for pre-competitive S&T col-laboration across developing nations in these areas.

Conclusions

Finally, we return to the global context from which these principlesfor developing nation S&T policy derive. This is a dynamic context.Developing nations need to develop highly sensitive ’horizon-watching’ capabilities to ensure that the strengths of vision andcommitment that are commonly embodied in five-year and longer-term plans are not lost in inflexibly targeting an outmoded globalS&T perspective. It is doubtful that any one could have predictedthe rise of the current global S&T dynamics ten years ago. Theexercise of ’horizon-watching’ must be a continuous one. Again,this would appear to be a task of considerable importance thatdeveloping nations might well approach together. The interests ofthe advanced nations or of the OECD members are likely to lookat these same horizons through quite different economic and plan-ning filters. In a global conference on S&T indicators held recentlyin Australia,20 for example, a fundamentally different perspectiveemerged between OECD members and representatives of thenon-OECD countries of Asia: OECD perspectives primarily con-cerned innovation, creating technological change; Asian developingcountry perspectives primarily focused on capturing the flows ofestablished technologies.

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Most importantly in the new global context it must be understoodthat the currency of global competitive advantage has changed asrevealed by the quote from Robert Reich at the beginning of thispaper. Within the new agenda what matters is the level of value-added activity the nation is engaged in within the global networkedeconomic entities. Ownership per se is, therefore, secondary andthe capture of highly mobile S&T knowledge is the primary concern.Entirely different principles of S&T policy are therefore implied,particularly emphasising the development and flows of people andembedding national S&T advance into aligned social/organisationalstrategies. The basic key word is Linkages-at institution to insti-tution level, at the national and international levels.

’

Lined up against developing nations are major cooperatingforces within Japan, the United States and Europe that havegenerated highly competitive cross-national S&T linkages. In orderto gain some leverage against this multinational power, developingnations either within or across regions, might well find it worth-while to identify key areas of advantage that could be derived fromcollaborative pre-competitive input of the kind that in Europemade the ESPRIT (European Strategic Program for Research andDevelopment in Information Technology) programme so success-ful, to forge strong linkages across the developing nations so thatcollectively they are in a more dominant position within the globalknowledge economy. The ESPRIT programme, modelled on theJapanese VLSI (Very Large Scale Integration) initiative, aimed todevelop pre-competitive generic (that is, applicable across severalsectors) research to be undertaken by firms and research instituteson a collaborative basis. Currently ECU 3.7 billion has been com-mitted. Alternatively, a programme probably of greater relevanceto the looser inter-governmental relationships of the South is theEuropean EUREKA (European Research Co-ordinating Agency)programme. Proposed by President Mitterand in 1985 as a Euro-pean programme to counter the American Star Wars initiative andto prevent highly qualified scientists and technologists in this areamigrating abroad, EUREKA has been shaped into an umbrellamechanism for encouraging firm-to-firm collaborations. UnlikeESPRIT, the programme has no central funding; instead, projectsare ’badged’, verifying the validity of the collaboration proposed,and thereby qualify for R&D support funding from nationalgovernments. EUREKA is highly successful with funding in

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September 1992 amounting to ECU 8.84 billion, it covers a numberof major European projects combining public and private sectorfunding, for such projects as development of the ’intelligent’ motor-car, high definition TV, and the next generation of semiconductors.2’As a concluding note it must be observed that knowledge flows

within the new global order of the 1990s are set in motion byintense competition. Crucial for entry into this foray is supportfrom domestic policies that strengthen and direct national S&Tinfrastructure development, as is support for the formation ofindustrial clusters and strategic alliances. However, whilst competi-tion on the global stage is strengthened by strategic cooperation, itis a hard fought battle at the leading edge. In keeping with MichaelPorter’s observation that global competitive capability derives fromcompetitive skills honed at home (Porter 1990), economic policiesof developing countries must define S&T strategies in an economicpolicy environment that encourages home based competition, par-ticularly to upgrade the dynamic efficiency of organisational (asdistinct from technological) capacities.22

NOTES

1. Quote from Reich (1991: 301).2. See Sharp (1994). Note, the reference is drawn from the draft on p. 26.3. Sharp (1994: 24).4. Denis Simon (May 1993: 13).5. See Australian Manufacturing Council (1993).6. See the Report by Robert Richie, Director, University Affairs, Hewlett Pack-

ard, at the Third International Conference on Academic Industry Relations,’Academic-Industry Relations and Industrial Policy: Regional, National andInternational Issues’, New York, 1-2 May 1993 (organised by the State Univer-sity of New York).

7. David Mowery (March 1992).8. See Hill et al. (1994).9. See Hill et al. (1994).

10. Australian Manufacturing Council (1993).11. Anne Booth (1992: Introduction, 34-35) and Hal Hill (1992: 244-49).12. See Hill (1993).13. These points emerge from the research carried out at the Centre for Research

Policy, the University of Wollongong, Wollongong, Australia. Relevant studiesare cited here.

14. National Board of Employment, Education and Training, Quantitative Indicatorsof Academic Research, Commissioned Report No. 27. A report of the Boardprepared by the Centre for Research Policy, Australian Government Publish-ing Service, Canberra, April 1994.

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15. Very extensive system-wide data on Australia’s research centres are containedin Centre for Research Policy Research Report No. 3, Research Concentrationin Australian Higher Education Institutions, Centre for Research Policy, Uni-versity of Wollongong, December 1993; Centre for Research Policy ResearchReport No. 7, Concentration and Collaboration: Research Centres in the Aus-tralian Research System: A Report on the Status, Activities and Concentration ofResearch Centres in Australian Universities, Centre for Research Policy, Univer-sity of Wollongong, September 1992. A summary is contained in Hill andTurpin (1993: 7-13).

16. Michael Gibbons (1993).17. Stephen Hill, ’Being There: The Importance of Innovation in Changing World

Markets’, Keynote address presented to IIR (a commercial organisation) Con-ferences, Research and Development, Sydney, 1-2 September 1993 (availablefrom the Centre for Research Policy).

18. National Board of Employment, Education and Training, Crossing InnovationBoundaries: The Formation and Maintenance of Research Links between Industryand Universities in Australia, Commissioned Report No. 26. A report of theBoard prepared by the Centre for Research Policy and Sultech, AustralianGovernment Publishing Service, Canberra, November 1993.

19. National Board of Employment, Education and Training (1993).20. ’Measuring Research and Innovation for Policy Purposes’, International Sym-

posium hosted by Australia, OECD Group of National Experts on Science andTechnology (NESTI) and experts from Science and Technology Policy AsianNetwork (STEPAN), the UNESCO-based Network, Canberra, 20-22 April1994.

21. See Sharp (1994: 13).22. This balance between promotion of infrastructure support and competitiveness

is developed particularly by Sharp and Pavitt (1990: 139-43).

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