From innovation as an interactive process to innovation systems and - PowerPoint PPT Presentation

From innovation as an interactive process to innovation systems and development strategies Bengt-Åke Lundvall Aalborg University Globelics Academy May 20 2013 Tampere

Structure of my presentation • Interactive learning is at the core of innovation studies. • Innovation system concept is based upon micro foundation of interactive learning • Narrow and broad definitions of national innovation systems • For less developed countries we must operate with broad definitions. • Some specific challenges for the least developed innovation systems.

Interactive learning at the theoretical core of Innovation Studies • The entrepreneurship studies theoretical core according to Shane (2000) : the key building blocks are respectively the individual and the opportunities that he/she faces. The process of entrepreneurship is one where individuals perceive, assess and act in relation to opportunities. • The innovation studies core (bal): The focus is upon innovation as an interactive process. The innovation process is one where individuals or organisations interact engaging in information exchange, problem solving and mutual learning . In this process they establish ‘relationships’ that may be seen as constituting ‘innovation systems’.

Schumpeter’s supply side bias • Schumpeter had focus on supply side • First defining the individual entrepreneur as the most important driver of innovation – In Theory of Economic Development – often referred to as Schumpeter Mark I. • Second defining the big oligopolist coporations and their R&D-department as the most important driver of innovation – often referred to as Schumpeter Mark II. • Schumpeter assumed that users and consumers would accept and use new processes and products. But he did not give them any active role. He neglected the demand side.

Schmookler’s challenge – on the importance of the demand side • Through analysis of time series and cross- sectional patent data and historical case studies, Schmookler demonstrated that demand-pull influences were also important: the more intense the demand, the more creative groups and individuals were drawn to work on an unsolved problem and the more patentable inventions they generated (Schmookler 1966 and 1972)

Christopher Freeman: The father of modern innovation theory • Economist from London School of Economics – went to Keynes ’ lectures, read Marx and Schumpeter. • Among Freeman’s favourite themes beginning of the 80’s were: • The need to overcome the split between innovation as driven by supply factors versus innovation as driven by demand factors. • The importance of understanding the interaction between agents in the innovation process. • Collaboration with Freeman in the beginning of the 1980s inspired the Mike project – see below.

The core literature 1990-2009 – all the five most cited works in Handbooks on innovation – are about innovation as interactive proces and about innovation systems. Nelson, R. (1993) : National Innovation Systems: A Comparative Study Porter, M. (1990):The Competitive Advantage of Nations Lundvall, B.-Å. (1992) : National Systems of Innovation Cohen, W. and D. Levinthal (1990) : Absorptive capacity: A new perspective on learning and innovation Saxenian, A. (1994) : Regional Advantage

The Modern understanding of the Innovation Process • Most innovations are outcomes of combinations of diverse elements of knowledge. • Such outcomes reflect interaction among agents with different insights and skills. • Interaction is social and reflects formal and informal institutions. • The economy is organised and constituted by social relationships – not just a set of pure markets!

Three different delimitations of innovation systems • Extended R&D-systems – linking knowledge institutions to production (Nelson and Mowery). • Extended production systems – focus on learning by doing, using and interaction in the production system (Freeman and Aalborg-group). • Extended production and competence building systems – + linking education and labour market systems to innovation (Lundvall 2002) – ICS in globelics stands for innovation and competence building systems!

A broad definition of national innovation systems ”The national innovation system is an open, evolving and complex system that encompasses relationships between and within organizations, institutions and socio-economic structures which determine the rate and direction of innovation and competence building emanating from processes of science based as well as experience based learning ”

Theoretical underpinnings/stylized facts • Innovation is a process that is: • Cumulative – From Babbage to Shockley • Path dependent – Making electronics components smaller • Context dependent – Different innovation styles in UK and Japan and between sectors and regions • Interactive – Firms do seldom innovate alone • Innovation and learning • You learn from what you do • Innovation with knowledge as input and as joint production of innovation and competence as outputs • Learning is a socially embedded process – social capital matters!!

Microfoundations of NSI 1. Interaction across markets – user-producer interaction as interoganisational learning 2. Interaction at work – modes of organisation and organisational learning 3. Social capital is crucial for the valorisation om intellectual capital 4. Social capital is highly nation-specific

The theoretical perspective on know-how knowledge as localized • Distinction between information and skill – know-about and know-how – is crucially important • Competence and skill are always partially local since they are partially tacit – moving people helps! • Competence is layered in people and organisations but not least in the relationships between people and organisations (rejection of methodological individualism) - moving people is not enough! • Only full codification leading to complete deskilling of doers and thinkers would make knowledge completely rootless (neo-classical world). Impossible in a context of on-going innovation.

Some major challenges for NSI- research Understand learning processes underpinning innovation • Modes of learning and their interaction • Informal factors affecting learning and innovation and the interplay with legal systems and formal institutions (cf. Imitation syndrome and Intellectual property rights in China) • Links between learning and development

Specifying the development challenge • Distinction between catching up/emerging (middle income ) and ’ innovating out of poverty ’ ( low income). • In catching-up absorptive capacity in high tech sectors is crucial. • In low income countries dynamising/reorganising the informal sector and upgrading low-tech and natural ressource based sectors is crucial. Upgrading skills with close connection between schooling and experience is important in both contexts. But also a need to stimulate the demand for knowledge!

Fundamental research questions linking innovation to development • The potential of Science-based Below the Radar innovation (Telecom in China, Automobiles in India) • The role of FDI and other mechanisms for knowledge spill-overs – the global competition for talent. • The role of innovation and competence building in the informal sector • The role of natural resources • The role of government and the nation state (the state as mobiliser of resources and organiser of national innovation system).

Specifying the development challenge for low income countries • Start from what you have got: Agriculture, Raw material, Tourism, Informal sector, Donor dependence, Increasing presence of China and India. And a lot of problems (=opportunities??). Weak infrastructure but a growing and young population with ambitions. • Education and investment in science remain fundamental. But increasing the supply of knowledge without increase in demand does not promote development. Innovation increases the demand for knowledge (Nelson and Phelps, 1966).

Education/learning systems and economic development • Problem based learning and shift between theory and practise in education • Understanding and upgrading everyday learning in formal and informal sector • Offering vocational training and apprenticeships to adult workers and farmers. • Managing brain-drain and brain-gain – mobilising the diaspora. STIMULATE THE DEMAND FOR SKILLED FARMERS, WORKERS AND PROFESSIONALS

The new world order and the role of China and India in Africa • The increasing presence of China and India may be seen as a threat (neo-colonialism) or as an opportunity (linking up with and learning from the business models of emerging economies). • Urgent to find ways to manage the presence of China and India toward constructive innovative solutions and toward knowledge sharing with mutual benefits. • Export promotion and subcontracting to foreign firms as ways to link up with ’ advanced users ’.