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  • 1. Systems of innovation and development policy: Some lessons learned Pointers for discussion Indonesia in Motion PPI-UK 19 March 2010 Yanuar Nugroho, PhD. Manchester Institute of Innovation Research – MIOIR/PREST Manchester Business School The University of Manchester © March 2010
  • 2. Contents • What is innovation? • National Systems of Innovation • Modes of knowledge production and Triple Helix • Science &Technology in Development Policy Perspective • Some lessons learned • Concluding remarks
  • 3. Innovation and creative destruction Joseph Alois Schumpeter (1883 -1950) was an economist and political scientist. He popularised the term "creative destruction" in economics and lays out a clear concept of entrepreneurship. He distinguished inventions from the entrepreneur’s innovations. Schumpeter pointed out that entrepreneurs innovate not just by figuring out how to use inventions, but also by introducing new means of production, new products, and new forms of organisation. These innovations, he argued, take just as much skill and daring as does the process of invention. Innovation by the entrepreneur, argued Schumpeter, leads to gales of “creative destruction” as innovations cause old inventories, ideas, technologies, skills, and equipment to become obsolete. The question is not “how capitalism administers existing structures, ... [but] how it creates and destroys them.” This creative destruction, he believed, causes continuous progress and improves the standards of living for everyone.
  • 4. Innovation – Some basic concepts • Innovation is usually understood to be distinct from invention. While invention is the first occurrence of an idea for a new product or process, innovation is the first attempt to carry it through into practice (c.f. ‘Creative Destruction’ – Schumpeter, 1934). • Obviously they are closely linked and difficult to distinguish one from the other (Fagerberg, 2005). • Literature on innovation is extensive and covers a wide range of topics , and studies on the role of innovation in economic and social change show a trend towards cross-disciplinarity. This reflects the fact that no single discipline is capable of dealing with all aspects of innovation. • Innovation studies examine: Invention and “search” (e.g. research and development); Innovation (not just successful innovation); Implementation; Diffusion; Changed practices
  • 5. Innovation – core categorisation Innovation Process Product Systems Technological Organisational Goods Services National Regional Local
  • 6. Technological Innovation – A classification Series of Incremental Innovations Radical Innovations Revolutionary Innovations Source: Freeman, 1997
  • 7. (Tech.) Innovation – diffusion and adoption LEVEL ceiling Competitive success not just Late based on quality of innovation: adopters, often issues of “complementary suppliers, assets” designs From niches and pioneering Early users to major markets adopters, suppliers, designs TIME From “ridiculous idea” to “we always knew this was the next big thing” Source: Rogers, 1995
  • 8. National Systems of Innovation • Conceptualisations of socio-economic relations of science and technology - National Systems of Innovation • Origins of National Systems of Innovations • “systems” approach rooted in evolutionary economics – non-linearity, learning, technology at the centre • Why- to understand the relative economic performance and competitiveness of countries – similarities and differences – do they explain differences in national performance (Nelson, 1993) • Freeman 1987– (Japan) NSI “the network of institutions in the public and private sectors whose activities and interactions initiate, import, modify and diffuse new technologies” i.e. processes of innovation • Role of firms in national economy Source: Flanagan & Barker PR6011
  • 9. National Systems of Innovation • Foundations of National Systems of Innovation • Lundvall 1992 – narrow (“searching and exploring”) and broad definitions – all parts and aspects of the economic structure and the institutional set up affecting learning as well as searching and exploring…production, marketing, finance sub-systems • Nelson and Rosenberg 1993 – “a set of institutions whose interactions determine the innovative performance of national firms” • Broad concept of innovation where the context is crucial – not just leading edge technological firms or world class research performers – but national technological capabilities and processes of transforming them into economic wealth Source: Flanagan & Barker PR6011
  • 10. Science, Technology Governance & Society • Links to Policy perspective • Metcalfe 1995 – “that set of distinct institutions which jointly and individually contribute to the development and diffusion of new technologies and which provides the framework within which governments form and implement policies to influence the innovation process. As such it is a system of interconnected institutions to create, store and transfer the knowledge, skills and artefacts which define new technologies.” • Motivations, incentives and interconnectedness • Science & technology from the policy perspective • Changing dynamics of knowledge production? Source: Flanagan & Barker PR6011
  • 11. Conceptualisation of knowledge production Mode 1 Mode 2 University as the main site Socially-distributed of knowledge production knowledge production – university just one actor Individual researchers Collaboration and teams Disciplinary Trans-disciplinary ‘Disinterested’ generation Solving problems in ‘context and validation of new of application’ knowledge Peer review – autonomy Reflexivity and evaluation – social accountability Science policy Innovation policy Source: Gibbons, et al., 1984; Shinn, 1999
  • 12. Triple Helix: University-Industry-Government The Triple Helix thesis states that the university can play an enhanced role in innovation in increasingly knowledge-based societies (Etzkowitz & Leydesdorff, 2000) Three institutional spheres drive the global knowledge-based economic system: university, industry and government Interactions between them shape them (dynamic) - inter-institutional relations Three ‘dynamics’: 1. Economic dynamics of the market 2. Internal dynamics of knowledge production 3. Governance of the interface Firms not centre stage
  • 13. Triple Helix: University-Industry-Government • Triple Helix 1 – interaction across boundaries is mediated by organisations e.g. industrial liaison offices, strong direction by the state of relationships • Triple Helix 2 – separate institutional spheres and control at the interfaces • Triple Helix 3 – overlapping institutional spheres, interchange of roles and hybrid organisations In one form or another, most countries and regions are presently trying to attain some form of Triple Helix III. The common objective is to realize an innovative environment consisting of university spin-off firms, tri-lateral initiatives for knowledge-based economic development, and strategic alliances among firms, government laboratories, and academic research groups E & L, 2000
  • 14. S&T in (Devp.) Policy Perspective – Rationales • “Policy for Science” (1945-1970) • “Science, the Endless Frontier”(Bush, 1945) • S&T funded because unquestionably worthwhile, required for national security; many decisions taken by industrial-military complex elites; • linear model of innovation – science as the motor of progress (without clear idea of exactly how..) • big science and technology programmes, e.g. nuclear, aerospace (prestige) • Policy concerned with managing growth of science as determined by scientists in their disciplines • “Science in Policy” (1970-1980s) • an age of questioning – need for reform – energy crisis, “Limits to growth” • Brooks report (OECD 1971) Science, Growth and Society • recognition that science should support policy objectives of modern state, policy not merely concerned with science itself • Social goal rationales move into the ascendancy – national well-being • science as a problem-solver • more demand than supply-led Source: Flanagan PR6011
  • 15. S&T in (Devp.) Policy Perspective – Rationales • “Research for Competitiveness and Innovation” 1980s, 1990s…? • slow economic growth – need to relate science to national economic performance • strategic science, “critical technologies”, focus on technology strengthening • Rise of large cooperative technological programmes leading to market failure • evaluation and foresight • integrate demand and supply – more systemic and network views abound – about greater co-ordination • Rationales for the new millennium? • Re-emergence of rationales for funding basic research (eg Japan) • Dominance of systems views founded in evolutionary economics • Support of networks (eg ERA, regional science policy) • Recognition of changes in institutions and global context of research Source: Flanagan PR6011
  • 16. Lessons learned • EU – strong research policy • ‘Aho report’ criticising failure to meet Lisbon target • Triple Helix as norm, despite (heavy) criticisms • BRIC – strong leadership • Clear technology policy (or at least, technological visions) • State plays a central role • SEA – clear objective • Singapore: clear policy, lead by state, influenced by business, ‘supplied’ by university; (civil) society left behind market; services and service industries • Thailand: policy transfer, referring to EU techno park as manifestation of TH practices; strong role of government; central role of culture creative and services industry • Malaysia: technology centre; strong role of government, high level of institutional coordination; high participation of (civil) society; but lacking systems at national level • India – wide participation • Strong role of (civil) society, clear policy objective, facilitated by state, influenced by brain circulation
  • 17. What should public institutions do? • Governments and public institutions need to be ahead of the game in understanding changes in the innovation process and to be fully aware of their potential. • It can enhance the efficiency and productivity of public services and extend the range of those services and the way governments and public institutions engage with the public. • Well-implemented systems can improve policy decision-making • Governments • to develop the technical infrastructure to support innovation – (including research & development) • to facilitate organisational infrastructure and collaboration skills to enable next generation innovation. • Universities will become more entrepreneurial, but many will lag far behind the leading edge of innovative practice. Many will need to restructure their educational offerings considerably to provide the talent and skills necessary for new generation innovation.
  • 18. Future matters – some conceptual issues All is about fallibility and uncertainties in the direction to which the society progresses • From ‘Futures’ to ‘Foresight’ (~Innov. Tech) – arguments: • The discovery of the future is intertwined with recognition of the transformative powers of Science, Technology and Innovation • Imagining a better world: from Utopia (1516) to the New Atlantis (1627) • ‘Bravery’ in developing, combining methods Thanks to Ian Miles
  • 19. BPS2008 – Map of trends 2008-2015 • Environmental and  sustainability concerns  are shared by all • Changing socio‐ economic patterns  and environmental  and sustainability  concerns are tightly  linked • Financial crisis close to  Trends the core issues Source: Nugroho and Saritas, 2009
  • 20. BPS2008 – Map of trends 2016-2025 • The relationship between  environmental and  sustainability concerns,  alternative energy  sources, and the role of  S&T is emphasised by all  • Ageing population is a  more shared concern • Financial crisis becomes  more peripheral for world  regions Trends Source: Nugroho and Saritas, 2009
  • 21. BPS2008 – Map of trends 2025-beyond • Climate change is right at  the centre and becomes  appreciated by all world  regions • More emphasis on the  scarcity of natural  resources • No mention of financial  crisis, globalisation, and  new diseases and  pandemics Trends Source: Nugroho and Saritas, 2009
  • 22. Some reflections • Weaknesses of NSI approach • Is national the right level? (multiple systems within one nation) • Links to globalisation? • How to measure (measure R&D expenditure, patents – or try to include human element for skills and knowledge transfer) • Gives static not dynamic analysis • Gives explanations? Or a means of description? • What are key factors? (comparative analysis problems) • Has been too linked to views of information transfer and not knowledge transfer • Triple Helix: Political rhetoric or conceptual framework?
  • 23. Concluding remarks • Innovation offers the prospect of generating more ideas, selecting more efficiently from them and then developing them faster. Moreover, it increasingly offers the prospect of doing this not just for the biggest businesses but for its smaller ones and for its public services – improving quality of life and maintaining our economic edge in an increasingly competitive world. • Increasing the speed and effectiveness of innovation adoption are not simple, nor do they offer quick wins. Indeed, it may not be obvious when they are succeeding. But the speed of the development of international competition based on innovation means that we have to quickly and cleverly use every tool available to its fullest advantage to improve innovation research and collaboration.
  • 24. Thank you.