Regional Innovation Policies: System Failures, Knowledge Bases and Construction Regional Advantage Michaela Trippl CIRCLE, Lund University VRI Annual Conference 3-4 December, 2013
Introduction Regional innovation strategies have become a key priority in many regions and countries worldwide Evolution of regional innovation policies: Linear model of innovation policy best practice model of interactive innovation customized innovation policy models (no one size fits all approach) Conceptual framework for policy formulation?
Overview Regional innovation policy: definition, goals and instruments Conceptual framework for policy formulation: System failure approach Constructing regional advantage: differentiated knowledge bases, combinatorial knowledge bases / related variety & regional industrial path development Conclusions
Definition of innovation policy (Lundvall & Borras 1997) Innovation policy refers to elements of science, technology and industrial policy that aim at promoting the development, spread and efficient use of new products, services and processes in markets or inside private and public organizations and policies which aim at organizational change & marketing of new products Many other policy areas affect innovation: education policy, labor market policy, competition policy, macroeconomic policy
Goals of regional innovation policy Policy focus (I) Promotion of innovation in highly specialised fields (cluster policy)? Promotion of innovations at the intersection of related fields (platform policies)? Policy focus (II) Promotion of current innovation & growth strengthening existing regional strengths? Promotion of future innovation & growth regional transformation? (e.g., EU s smart specialization agenda) Both current strengths and future potentials?
Regional innovation policy instruments: a taxonomy (OECD 2011) Knowledge generation Knowledge diffusion Knowledge exploitation Traditional instruments Emerging instruments Experimental instruments Technology funds, R&D incentives/grants Support for scientific research & technology centres Support for infrastructure development Human capital for S&T PPP for innovation Research networks/poles Cross-border research centres Science parks TT offices and programmes Technology brokers Mobility schemes, talent attraction schemes Innovation awards Innovation vouchers Certifications/accreditations Incubators Start-up support Innovation services Training & raising awareness for innovation Industrial PhDs Support for creativity and design Innovation benchmarking Competitiveness poles Competence centres New generation of scientific and tech. parks and clusters Venture & seed capital Open source-open science markets for knowledge Regional industrial policy Innovation-oriented public procurement
System failures approach (IS concept) Deficiencies of innovation systems Basis for legitimizing public intervention (replacing the neoclassical market failure approach as dominant paradigm) Various types of system failures (Woolthuis et al. 2005) : infrastructural failures institutional failures (hard and soft institutional problems) interaction failures (strong & weak network failures) capabilities failure Recently: Transformational system failures: directionality, demand articulation, policy coordination & reflexivity failures (Weber & Rohracher 2012)
RIS failures (Tödtling & Trippl 2005) Organizational thinness: Crucial elements of a RIS are missing: low levels of clustering & weak endowment with key organizations (often in peripheral regions) Negative lock-in: Over-embeddedness & overspecialization (often in old industrial regions) Fragmentation: Lack of interaction between RIS elements (often in metropolitan regions)
Addressing RIS failures (Tödtling & Trippl 2005) Policy strategies to address RIS failures: Peripheral regions (organisational thinness): Strengthening existing industries; accessing knowledge by linking domestic firms to external knowledge providers and attracting innovative companies and research organisations from outside the region Old industrial regions (negative lock-in): Restructuring of the regional economy; fostering renewal and change of existing organisational, institutional and network structures Metropolitan regions (fragmentation): Enhancing interactive learning and knowledge circulation within the RIS; stimulating the development of science-based industries
Constructing Regional Advantage (CRA) (Asheim et al. 2007) Competitive advantage through an explicit policy push promotion of a Chamberlinian monopolistic competition based on product differentiation unique assets or products CRA can be based on very different knowledge bases / modes of innovation Strenghtening regional innovation systems policies
Differentiated knowledge bases (Asheim et al. 2011) All industries not only high tech and R&D-based ones are engaged in innovation & knowledge creation processes Three different types of knowledge bases: analytical, synthetic, symbolic - different mixes of codified & tacit knowledge, different qualifications & skills, reliance on different institutions Focus: nature of the critical knowledge which knowledge creation and innovation processes in different industries cannot do without No type of knowledge should be considered superior all three can generate innovation & growth
Differentiated knowledge bases: A typology (Asheim et al. 2011) Analytical (science based): genetics, biotech, IT, nanotech. Synthetic (engineering based): industrial machinery, shipbuild.) Symbolic (arts based): film, TV, design, fashion Rationale for knowledge creation Developing new knowledge about natural systems by applying scientific laws Applying or combining existing knowledge in new ways Creating meaning, desire, aesthetic qualities, affect, symbols, images Development and use of knowledge Scientific knowledge, models Problem solving, custom production Creative process Actors involved Collaboration within and between research units Interactive learning with customers & suppliers Experimentations in studios, project teams Knowledge types Strong codified knowledge content, highly abstract, universal Partially codified knowledge, strong tacit component, more context specific Creativity, cultural knowledge, sign values; strong context specificity Importance of spatial proximity Meaning relatively constant between places Meaning varies substantially between places Meaning highly variable between place, class and gender
Policy implications? Firms / industries with different knowledge bases need different types of support from the RIS (Isaksen & Karlsen 2013, Martin et al. 2011) Analytical knowledge base narrowly defined RIS: linkages between knowledge generation & diffusion subsystem (universities, R&D institutes, TTOs) and knowledge application & exploitation subsystems (firms in the region) Synthetic & symbolic knowledge bases broadly defined RIS: wider system of organisations and institutions supporting learning and innovation, and their systemic interactions with firms Key question: How do foster innovation in analytical, synthetic & symbolic industries?
Addressing Knowledge Bases (Martin & Trippl 2013) Analytical Synthetic Symbolic Network initiatives UIPs International networks Inter-firm collaboration, user-producer links National & regional links Project-based collaboration; Regional & local links Research and education infrastructure HEIs in natural & formal sciences; top research milieus & global centres of excellence HEIs in engineering based field, technical colleges with focus on applied science HEIs in creative & arts based fields; cultural & creative infrastructure Innovation support for start-ups and SMEs Science & tech. parks Technology transfer agencies, industrial PhDs Innovation vouchers, Life-long learning schemes, schemes for worker participation Business support & coaching, provision of meeting places, public procurement Mobility and talent attraction schemes Attraction of (star) scientists, business & people climate Business climate (laws, regulations, tax incentives) People climate (diversity, tolerance, quality of place) Anchoring projects Big science projects, large scale research facilities Attraction & retention of large anchor firms Regional branding & place marketing Architectural landmarks
Combinatorial knowledge bases and related variety Are policy approaches that are customized to needs of different knowledge bases enough? risk of negative lock-in? Diversity and relatedness of knowledge bases / industrial sectors more conducive to innovation than specialisation (Boschma & Frenken 2011)
Related variety & regional branching Technologically related industries / sectors that are related in terms of shared or complementary knowledge bases (related variety) provides local learning opportunities & growth potentials for existing industries and local sources of growth for new industries (regional branching path renewal) Path renewal: existing industries branch into different, but related sectors related diversification (Boschma & Frenken 2011) Overall policy aim: Promotion of economic diversification of regions interindustry cross-overs Policy focus: Identification of related variety and bottlenecks in a region that prevent related industries to connect and interact Policy Options: Enhance related entrepreneurship, encourage labour mobility between related sectors, support networks between partners with different but related competences
Related variety & regional branching Can this approach work in any type of region? Core regions with organizationally thick RIS have more opportunities as they benefit from dense structures, many innovative firms in related industries, presence of different knowledge bases, strong endowment with supporting actors) Non-core regions with organisationally thin or locked-in RIS lack such conditions Other forms of regional path development & change? Path extension: incremental product & process innovation in existing industries & along established technological paths Path revitalization: incremental & radical innovation to regain competitiveness in existing industries (averting path exhaustion) New path creation: emergence of entirely new industries
Evidence from Austria Path renewal in old industrial areas: automotive industry in Styria Endogenous (diversification of regional firms) & exogenous (FDI) sources of change Policy actions to reconfigure supporting infrastructure (Trippl & Otto 2009) Path extension in metropolitan regions: food industry in Vienna Regaining competitiveness by linking firms with local universities (combination of synthetic knowledge with analytical one), supported by specific policy programmes (Trippl 2011) New path creation in the periphery: software industry in Mühlviertel Exogenous development impulses (inflow of analytical knowledge through settlement of research organizations) Proactive policy: continuous investment in research & education infrastructure, support for new firm formation, promotion of new combinations of analytical & synthetic knowledge (Isaksen & Trippl 2013)
Addressing regional industrial path development Well-performing core areas - organisationally thick RIS: regional transformation as endogenous process supported by narrowly defined RIS Non-core areas organisationally thin RIS and locked-in RIS (peripheral and old industrial areas): regional transformation requires exogenous sources of change stronger role of policy-supported / policy-led path creation (Morgan 2013) supported by broadly defined RIS
Conclusions Regional innovation policy: stimulation of current and future innovation and growth by taking into consideration varying innovation and transformative capacities of regions, influenced by: differentiated knowledge bases combinatorial knowledge dynamics (related variety) RIS structures and failures Different types of regions require different foci on: endogenous vs exogenous development impulses, building narrow vs broad RIS, type of policy-supported path development
Many thanks for your attention michaela.trippl@circle.lu.se