Regional Economies in a Globalising Economy
Enhancing Intellectual Capital and Innovation
Cardiff, 21 November 2008
Challenges for the Design
of Regional Innovation Policies:
Lessons from Europe
Claire Nauwelaers
UNU-MERIT
Maastricht University and United Nations University
Plan
1. Changing framework for innovation and
innovation policy in regions
2. State-of-the-art in innovation policy in EU
3. Examples of regional innovation policy
instruments in Europe
4. Policy challenges: the way forward
The changing framework for innovation
1. Increased awareness of the role of innovation as
crucial ingredient for economic development
2. Interactive and open view of innovation - innovation
differs from R&D – central role for enterprises
3. System-based approach to innovation, emphasis on
learning and diffusion / absorption of knowledge
4. Mobility of tacit knowledge embedded in humans
becomes a key performance factor
5. Diversity in innovation « ecosystems » and role of
informal institutions
6. Glocalisation : localised nature of (tacit) knowledge
spillovers - importance of global connections
Science and Innovation Systems
Framework conditions Rules &
Science Innovation
policy
policy
Public R&D
Intermediaries
Education
& Training
Human capita
l
Firms
R&D
Firms
system
Large, small,
MNCs, NTBFs, …
Venture
Capital
Regulations
Incubators,
Mentoring…
MARKETS
Business
support
Policies for innovation systems
Objective of policy intervention: from optimal allocation of
resources, towards ensuring the overall coherence of the system
and improving its evolution capacity.
Instruments’ targets: free flow of knowledge in the system,
addressing lock-in situations, favouring networking between
innovation actors, etc.
Justified by systemic failures arguments.
“Systemic” policy instruments are gaining ground
(Kuhlmann and Smits 2004):
oriented towards the evolution of the innovation system
preventing lock-ins
building of spaces for interactions between the actors
support to creativity
Policies for innovation systems
From “stocks” to “flows” as main focus of policy attention
Flows in the system need to be addressed in priority
From “raising resources” towards “promoting change”
Performance is affected by learning abilities of firms and others
From “best practice” towards “context-specific” solutions
Policies should be fine-tuned to specific system failures
From “standard” policy-making towards policy “learning process”
There is a need for more strategic intelligence in policy-making
Policies for “activating knowledge”
State-of-the-art in innovation policy
 Innovation policy scene : dominated by linear
tools, addressing inputs in the innovation process
rather than the functionning of the system,
providing support to firms in isolation rather than
to networks of actors
 Policy instruments that address changes in
behaviour for innovation, dealing with strategic,
informational, or organisational or needs : rare
and immature
 Lack of strategic approach to policy system
Behavioural additionality in firms
Moving towards a learning organisation implies :
• Internal changes : flat hierarchies, devolution of responsibilities,
multi-functional teams, new competencies (flexibility,
responsibility…), « second loop » and « on line » learning,
quality management, human resource development, …
• External changes : inter-firms relationships, external networks
Empirical analysis of 2000 Danish firms (2001 survey) :
 firms combining several of the organizational traits of the
learning organization are more innovative
 (incremental) innovation and learning are two sides of the
same coin
Nielsen and Lundvall, DRUID Working Paper N°03-07
Regional policy instruments
targeting innovation in SMEs
• Value of “umbrella” instruments
• Appropriate policy portfolio : based on
combination of regional and firm’s deficits
• There is no one-size-fits-all policy system
• Policy designers and implementers need : high
degree of understanding of the innovative
firm's behaviour, self-reflexive capacity and
openness to evaluation
• Division of labour within government causes
policy fragmentation
RITTS Success and Failure factors
RTDI
Capacity
Institutional
Capacity
Economic
Experience
in
strategy
Region
Capacity
RITTS
driving
force
RITTS
Management
Openness
Inclusiveness
conditions
Political backing
throughout
RITTS
Management
of
consultants
Legitimacy
Political
backing
Legitimacy
of project
leader
Inclusiveness
of
process
RITTS outputs : examples
(with a policy learning dimension)
 Voucher scheme in Uusimaa (Finland)
Evolution towards more demand-led scheme
 Spiegel (= Mirror) project in Limburg (NL)
Improving strategic thinking in SMEs
 Clusters in Overijssel (Netherlands)
Interactive policy – making
 Competence centres in Berlin (Germany)
Global approach to innovation
Common features of new instruments
 Background : interactive innovation
 Coordination and synergy of support
 Target = SMEs needs, bottom-up defined
 Behavioural additionality
 Focus networks of actors (system-oriented)
 Learning in policy making
Need for bridging initiatives between
actors in innovation system
•
•
•
•
Clusters programmes
Competitiveness poles models
Regional growth initiatives
Etc.
« Systemic » innovation policies
Challenge for Innovation policy : organise
complementarity and synergy
between policy areas
Implications for Science Parks
The BRIDGE
The CLUSTER of
COMPETENCE
 Technology transfer
 Dialogue creation
 From source to recipient
 Multilateral exchanges
 A specific place
 A node in a system
 Focused support
 Multiple support
 Material support
 “Learning support”
 In-house support
 Clearing house
 Technology gap
 …and managerial gap
Implications for
Regional Innovation Agencies 1
Issue
Old paradigm
New paradigm
AGENCIES AS PART OF THE SYSTEM
Place of agency
Outside of the system
Actor in the system
Role of agency
Top-down resources
provider
Facilitator, a node in the system,
change agent
Market failures
Systems failures, learning failures
Rationale for
intervention
ENTERPRISE-CENTERED INNOVATION SYSTEM
Innovation definition
Innovation as exploitation of
technological
opportunities
Wider concept of innovation,
market opportunities
as key driving force
Target of instruments
Technology transfer
Firms’ absorptive capacities
Learning capability
People, talent, competence, creativity
Learning channels for
innovation
Research providers,
industry-science
relationships
Firm-to-firm interactions, firms
networks, public-private
partnerships
Importance of innovation environment
Implications for
Regional Innovation Agencies 2
AN OPEN TERRITORY
Territory definition
Administrative boundaries;
Local networks view
Functional definition;
cross-border regions
A node in global networks
CONSTRUCTING REGIONAL ADVANTAGES
Mission
Redistributing funds
Identifying and reinforcing
strengths in the system
A change agent
SMART POLICY MIXES
Instruments
Isolated instruments
Portfolio of interacting and
coordinated instruments
(“policy mix”)
Implications for
Regional Innovation Agencies 3
POLICY COORDINATION
Organisation of intervention
Fragmented
intervention landscape
Policy coordination
by fields and levels
STRATEGIC INTELLIGENCE
Goal definition
Based on existing structures
Static
Problem-oriented
Agile
Accountancy and control
mechanisms
Administrative and financial
Strategic, goal-oriented,
additionality a strategic issue
Evaluation focus
Input and output additionality
Behavioural additionality and
learning capacity.
Evaluation as learning device.
Focus on effectiveness
Management style
Traditional
Oriented towards learning
Autonomy
Restricted: executive mission
for authorities
Expanded: delegation of
strategic decisions
S&T intermediary system in Wallonia
Firms’ needs
A: Innovative
and R&Dintensive cies
B: Innovative
adaptive
companies
C: Potentially
innovative cies,
not well
structured for
innovation
A
B
C
Raise their number
Research commercialisation,
spin-offs…
Move to A
technology diffusion ,
find new opportunities…
Move to B
Raise innovation
awareness
mentoring…
S&T intermediary system in Wallonia
Organisation of support
University interfaces, IP management,
science parks, venture capital,
RDT aids, access to EU R&D, …
A: Innovative
and R&Dintensive cies
A
B: Innovative
adaptive
companies
C: Potentially
innovative cies,
not well
structured for
innovation
Collective research centres,
Technology centres,
technology audits,
SMEs aids…
B
C
Scattered support, unprofessional
Small cies networks…
Structural Funds for the knowledge economy
2000-2006: 5.5% of total EDRF resources devoted to RDTI
Objective 1 zones: 5% - Objective 2 zones: 10%
Above average weight of SF
EF FORT = RTDI SF/POP
Above average RTDI effort (Ūper person)
PT
ES
IE
GR
FI
DE
AT
BE SE
UK
LU
FR
DK
NL
WEIGHT = SF/GDP
EU25
IT
EE
HU
SI
MT
CZ
SK
PL
LT
LV
CY
Above average weight of SF
Below average RTDI effort (Ūper person)
Source: Technopolis, UNU-MERIT, Lacave, Ismeri, Logotech (2006)
Structural Funds for the knowledge economy
Main bottlenecks to efficient absorption of funds and effective
outcomes of RTDI measures:
Administrative rather than strategic management of RTDI measures
Lack of expertise at national and regional levels in managing RTDI
measures
Continuing dominance of supply-side measures with poor linkages
to regional innovation systems
Limited interest for many ‘softer’ ‘demand-side’ measures aimed
directly at enterprises
There is path dependency: share of SF devoted to RTDI higher where
national innovation policy is more intense, and lower where national
policy is weaker. Difficulties for the SF to modify national strategies.
Source: Technopolis, UNU-MERIT,Lacave, Ismeri, Logotech (2006)
The diversity of European regions
-5,00
-4,00
-3,00
-2,00
-1,00
0,00
1,00
2,00
3,00
4,00
5,00
Manufacturing Platforms
Tertiairy oriented Cohesion
Science&Service
Central Techno
Employability
Experienced and Qualified
Accession
Peripheral & Rural
Government Services
German High-tech
Hubbing Dynamics
Public know ledge
Urban services
Private Technology
Employability
Source:
Wintjes
(2006)
Key challenges for ERDF
Need for differentiated policies
move towards supporting more demand than
supply side of innovation (ex ante analysis !)
balance technology focus with other forms of
innovation
consider ‘downstream’ research developed for
the needs of markets
give preference for competitiveness when
developing strategies
focus on social capital
Innovative and more complex projects should
be favoured over focus on funds absorption
Source: Technopolis, UNU-MERIT,Lacave, Ismeri, Logotech (2006)
National Reform Programmes:
towards improved policy governance ?
“The Open Method of Coordination is a powerful instrument to
assist Member States in their efforts to adopt a more
strategic and integrated approach and to deliver more
efficient polices” (European Commission 2005).
• Aim of NRPs: to identify coherent and integrated mix of
policies which together would bring the leverage effects
towards the Lisbon objectives
• Gaps in the strategic loop: diagnosis – broad routes instruments
• Prioritisation and effectiveness of policy mix ??
• Continuum science – technology – innovation (despite
Commission guidelines !)
Source: Lisbon expert
group (2006)
National Reform Programmes:
towards improved policy governance ?
• Positive correlation between RDTI performance and
priority on knowledge policies
• Administrative versus strategic policy implementation
• New coordination structures but few “policy mix”
considerations
• Ex post appropriation process of NRPs
• A current limited role of indicators to monitor policy
success
• Policy evaluation does not appear prominently
• Weak visible impacts of OMC so far
• Marginal internationalisation trends
Source: Lisbon expert
group (2006)
Inside the black box of policy-making
Stakeholders
pressure
Other policy
considerations
International
benchmarking
Innovation
policy
design
Policy
implementation
Policy
evaluation
NIS
analysis
Strategy
making
How to reinforce this loop ?
Tensions in policy-making
• Competing rationalities across policy fields and
different schools of thoughts
• Short-termism in resources allocations
• Innovation as a “homeless” policy
• New Public Management and need for coherence
• Individual ambitions versus grand visions
Source: OECD
MONIT study (2004)
Innovation Policy :
The way forward (1)
• Effectiveness of innovation systems depends on
balanced combination of 3 capacities :
– creation of knowledge
– diffusion of knowledge
– absorption of knowledge
• Growing importance of framework conditions
– entrepreneurship
– competition rules
– labour market conditions
– financial market
– social capital, ...
Innovation Policy :
The way forward (2)
• Government’s role shifts from investor to facilitator
- promotion of public/private partnerships and
interface management
• Improving knowledge governance in firms and
clusters of firms becomes a key issue
•



Policies need to "open borders" : between :
traditional fields of policy intervention
industries traditionally defined
various forms of knowledge production and
diffusion
Innovation Policy :
The way forward (3)
• More efficiency through “Policy packages” rather
than isolated instruments – Consider Policy Mix
• Demand oriented innovation policies: a “set of
public measures to induce innovations and / or speed
up diffusion of innovations through increasing the
demand for innovations, defining new functional
requirement for products and services or better
articulating demand.” (Edler 2007)
– Public procurement.
– “Soft steering" concepts geared to the willingness and
ability to accept, demand and apply innovations
– Measures stimulating the articulation of needs,
preferences, ideas and fears of potential users
– Shaping of regulations and norms
Innovation Policy :
The way forward (4)
• Need for more strategic policy intelligence
– monitoring and evaluation of policies
(systemic evaluations !)
– sound analyses of innovation systems
– « intelligent » benchmarking practices
– long term views (foresights, strategic learning
platforms, etc. )
– inclusive policy design processes,
stakeholders engagement