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Innovation System Research and Policy: Where it came from and where it should go. Globelics Academy Lisbon May 4, 2007 Bengt-Åke Lundvall Aalborg University and Tsinghua University. Conceptual issues: Innovation and innovation systems.

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innovation system research and policy where it came from and where it should go

Innovation System Research and Policy: Where it came from and where it should go

Globelics Academy

Lisbon May 4, 2007

Bengt-Åke Lundvall

Aalborg University and Tsinghua University

conceptual issues innovation and innovation systems
Conceptual issues: Innovation and innovation systems
  • Innovation is a new idea brought to the market or into the production process.
  • Technical innovation vs. organisational change.
  • Innovation as interactive process
  • System of innovation as constituted by interdependent organisations – focus on relationships.
  • National systems of innovation differ in terms of economic structure and institutional set-up. They are learning systems (including R&D-efforts).
structure of the lecture
Structure of the lecture
  • A brief history of innovation system research
  • Theoretical challenges for innovation system research
  • Comparing the Danish innovation system with other European systems
the message
The message
  • The drift away from the original concept of NSI made it narrow and focused on science as sole source of innovation.
  • Strong science with weak innovation is not a paradox – reflects NSI-weakness in organisational learning and lack of market orientation
  • A need for research to develop theories that makes it possible for us to understand national systems as learning economies
the original nsi concept
The Original NSI-concept
  • Friedrich List (1840) as the Grandfather and Freeman (1982) as the Great Father.
  • My 1992-version was based upon collaboration in Aalborg with Andersen, Johnson, Dalum, Villumsen and Fagerberg among others.
  • List, Freeman and Aalborg versions were broad and linked innovation to the production system and to the organisation of firms.
context for original nsi
Context for original NSI
  • List as catch-up analyst and as involved in policy advice - Freeman as modern List
  • The Ad Hoc OECD-group on Science technology and international competitiveness 1981-83.
  • In common for Freeman and myself was a criticism of competitiveness strategy based on low wages – ’structural competitiveness’
  • The OECD TEP-program 1989-92 diffused the NSI-idea.
brief history of innovation research antecedents to the nsi concept
Brief history of innovation research – antecedents to the NSI-concept
  • Adam Smith on the role of both experience-based and science based learning as the basis for innovation. And on the importance of vertical division of labour for wealth of nations.
  • Friedrich List on the need for govenrmental infrastructural investment to build national innovation systems
  • Schumpeter and Schmookler and debate on Supply- or Demand-driven innovation. Modern view of innovation as an interactive learning process.
christopher freeman the father of modern innovation theory
Christopher Freeman: The father of modern innovation theory
  • Economist from Cambridge – 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 interaction between agents in the innovation process
  • 1982 Freeman introduced the concept ’national system of innovation’ in unpublished paper for OECD-group.
sti mode and dui mode of learning getting the nsi concept back on track
STI-mode and DUI-mode of learning – getting the NSI-concept back on track
  • STI=Science-Technology-Innovation mode is characterised by science-approach – formalisation, explicitation and codification
  • DUI=Learning by Doing, Using and Interacting mode refers to experience-based, implicit, embedded and embodied knowledge.
  • Jensen, Johnson, Lorenz and Lundvall, ’Forms of Knowledge and Modes of Innovation’, Research Policy, 2007
the paradox and the built in sti bias
The paradox and the built in STI-bias

The Paradox: ’Systems with a lot of good domestic science but less successful in innovation’

  • Reflects the limited perspective with too much focus on Science based learning (STI) to the neglect of Experience based learning (DUI).
  • Reasons for bias:
    • STI-learning can be measured and manipulated more easily than DUI-learning – cf. the Meadow-project in Europe.
    • The policies involved are less controversial – cf. The LOK-program in Denmark.
the double change in context
The double change in context
  • ICT and access to elements from the science base becomes increasingly important for firms in all sectors – calls for a strengthening of STI-mode of learning
  • But these changes and globalisation contribute to accelerating change and requires learning organisations – calls for a strengthening of DUI-mode of learning
illustrating empirically how dui and sti learning promote innovation
Illustrating empirically how DUI and STI-learning promote innovation
  • Year 2001, DISKO survey on technical and organisational change addressed to Danish firms in the private sector,.
  • Survey and register data from 692 firms included in the following analysis.
  • Jensen, Johnson, Lorenz and Lundvall in Research Policy 2007.
dui learning seven indicators reflecting learning organisation and user focus
DUI-learning - seven indicators reflecting ’learning organisation’ and ’user focus’
  • The firm makes use of some of the following practises:
    • Interdisciplinary workgroups
    • Quality circles/groups
    • Systems for collecting employee proposals from employees
    • Autonomous groups
    • Integration of functions
  • Demarcations between groups of employees have become less sharp 1998-2000.
  • The firm has established closer relationships with customers 1998-2000.
sti learning three indicators reflecting r d effort and networking with science infrastructure
STI-learning – three indicators reflecting R&D-effort and networking with science infrastructure
  • The firm has positive expenditure on R&D.
  • The firm has personnel with academic degree in natural science or engineering.
  • The firm interacts with researchers attached to universities or other science institutes.
on the need to combine science with experience based learning
On the need to combine science- with experience-based learning
  • Firms combining science-based (STI-mode) with experience-based (DUI-mode) learning are more innovative than firms biased toward one mode.
  • Calls for analytical efforts that establish the connection between knowledge creation through research and knowledge creation through organisational learning and inbteraction with users.
  • Implies broad definitions of innovation systems, innovation policy and knowledge management.
two kinds of bias in industrial policy
Two kinds of bias in industrial policy
  • Promoting the science base of high-tech firms assuming DUI takes care of itself
  • SME policies sometimes neglects the importance of linkages to sources of codified knowledge

The big challenge lies in stimulating firms to combine the DUI- and the STI-mode.

slide18
Similar tension in the knowledge management literature reflects different emphasis on different types of knowledge
    • Implicit/tacit………..Explicit Knowledge
    • Know how………….Know why
    • Skills………………..Information
    • Intuition……………..Analytical skill
    • Experience based……..Science based
    • Local……………………Global
  • Most economically relevant knowledge mix elements placed differently on these scales
the national context affects what is good practise knowledge management
The national context affects what is good practise knowledge management
  • Education and labour markets differ (Lam –Lundvall paper)
  • The mode of learning in firms differs across countries (Lorenz – Lundvall-Valeyre paper for conference) – affects what is going on inside firms
  • Social capital and networking opportunities differ- networks and alliances show different patterns.
cluster analysis of how people learn in different parts of europe
Cluster analysis of how people learn in different parts of Europe
  • Based on household survey in 15 European countries
  • Restricted to 8000 people who work in the private sector in firms with more than 20 employees.
  • Emphasis on the degree of independent problem-solving and learning at the workplace.
  • Links DUI-learning to innovation.
  • Work in progress: But see Lorenz and Valeyre in Lorenz and Lundvall (eds), How Europe’s economies learn, 2006
the four clusters
The four clusters
  • Discretionary learning
    • A lot of learning, complex tasks and delegation of responsibility for quality
  • Lean production
    • Job rotation, team work and quality control but little discretion
  • Taylorism
    • No problem solving, no autonomy
  • Simple production
    • Little learning but some discretion and problem-solving
results international diffusion after correcting for sector and job function
Results: International diffusion – after correcting for sector and job function
  • Discretionary learning and lean production in Nordic countries and Netherlands
  • Little DL and a lot of Lean production in UK, Ireland and Spain
  • Taylorism and simple production in Portugal, Greece and Italy.
  • Germany and France in between 1 and 2 above.
conclusion
Conclusion
  • In order to explain how new ideas are brought to the market and transformed into economic performance it is necessary to take into account how learning takes place in working life.
  • National systems of work organisation and learning are dramatically different.
  • NSI is a useful perspective also for microstudies of specific firms. In spite of globalisation the management challenge is nation specific.