Innovation SystemsTiina-Laura TõnuristUnggul SagenaKristiine Saat
Presentation Scope and AimAim: to provide information about InnovationSystem approach and Innovation and developmentScope:● definition (innovation, system of innovation,approach of IS)● typology, actors and agents of IS, strength andweaknesses, measures● System of Innovation for Development (SID)● some examples and implementation
Innovation and Typology of Innovations● Innovation is “..novel implementation of an invention, discovery, newor existing knowledge in economic process” (Joseph A. Schumpeter)● Innovation “New significantly improved product (good or service)introduced to the market of the introduction within an enterprise of anew significantly improved process (inc. marketing) (OECD)Typology:● New Product or Service (product innovation)● Changes in production methods (process innovation)● Changes in the structure of the enterprise or in the ways oforganising work (organisational innovation)● Introduction of novel design solutions and sales methods (marketinginnovation)Incremental & Radical (Edquist 2001)
Innovation Actors and Agents● Innovation and Entrepreneurs (Firms, Companies)- Internal firm (variety of sources of innovation within the firmsuch as R&D lab, marketing etc)- Inter-firm relations (user, suppliers, competitors feedback)● Innovation and State- Government : Regulatory framework, policy environment- Non Government Agencies (technology and industryassociations etc)● Innovation and R&D intense agency- University and Research (quality of education, R&D intensity,research allocation to basic, applied and experimental research)- Triple-Helix Innovation System (university-industry-governmentinteractions)
Innovation and Development● Economic development is based on innovation,while innovation is characterized by somesystemic elements which is the central theme ofthe innovation systems approach● The IS approach has become dominatingapproach in policy making since the 1990s andhas become an “endogenous part of theeconomy” (Edquist and McKelvey 2000, xi)
Innovation System● “the network of institutions in the public and private sectorswhose activities and interactions initiate, import, modify anddiffuse new technologies” (Freeman, 1987, 1995)● “all parts and aspects of the economic structure and theinstitutional set up affecting learning as well as searching andexploring —the production system, marketing system and thesystem of finance present themselves as subsystems in whichlearning takes place” (Lundvall, 1992)● “The set of institutions whose interactions determine theinnovative performance of national firms” (Nelson andRosenberg, 1993)● “all the important economic, social, political, organisational,institutional and other factors that influence the development,diffusion and use of innovations” (Edquist, 1997)
Approach of Innovation System● National System of Innovation (Freeman,1987; Lundvall, 1992, Nelson, 1993)● Regional System of Innovation (Cooke, 1992,2001)● Sectoral System of Innovation (Carlsson,1995, Berschi and Malerba, 1997, Malerba,2004)
Other Approaches● Development blocks (Dehmen,1988)● Complexes (Glatz and vanTulder, 1989)● Innovation milieu (Camagni1991; Tatti et al, 1997)● Complex products and systems(Hobday et al, 2000b)● Competence blocs (Eliasson1997)● Technological regimes (Nelsonand Winter, 1982)● Industrial filieres (Van Thlderand Junne, 1988)● Innovation districts (Pyke et al,1990)● Sectoral innovation systems(Breschi and Malerba 2000)● Regional innovation systems(Cooke 1997)● Technological innovationsystems (Carlsson andStankiewics, 1991)● National innovation systems (DeBresson and Amesse, 1991)● Business networks (BIE, 1991)● Value-chains (Walters andLancaster, 2000);● Clusters (Porter, 1990)Based on Manley (2003)
Strengths of SI Approach● Places innovation and learning at the center offocus● Adopts a holistic and interdisciplinary approach● Employs historical and evolutionary processeswhich makes the notion of optimality irrelevant● Emphasizes interdependence and nonlinearity● Encompasses both product and processinnovation as well as subcategories of theseinnovation types● Emphasizes the role of institutionsbased on Edquist (2006)
Weaknesses of SI Approach● Conceptual approach rather than theoreticalframework (depending on a scholar, this can beeither a strength or a weakness: “overtheorized”vs “undertheorized”)● Components not specified - what componentsshould be included and what excluded in thesystem of innovation● "Institution" has different meaning for differentscholars and authors. (sometimes referred to asorganizational actor or institutional rule,sometimes as different organizations or “players”)based on Edquist (2006)
Systems of Innovation forDevelopment (SID)● Characteristics or variants of SI approach(national, regional, sectoral) - although havingdifferences, address the similar aims for thedevelopment● SID is “..a version or variant of the SI approachthat is relevant to conditions and problemscharacteristic to developing countries” (Edquist2001, 14)
SID compared to SI● SID -> more interest is taken in absorption and diffusionof innovations● Incremental innovations are more relevant to developingcountries than radical ones (easier to achieve)● For developing countries it is easier to acquire the skills onhow to produce products in low and medium technologysectors than in high technology sectors● Just like SIs, SIDs can also be national, regional orsectoral (or combination of these three)● SID has the same basic characteristics as SI● Changes in the structure of production are more necessaryfor developing countries (SID) -> advanced productionstructure is part of development process -> thus, productinnovations are more important than process innovations(Edquist 2001)
SID compared to SI● For SIDs -> organizations and institutions (+interactionbetween them) are key components of innovation systems(just like for SIs)● Compared to SI approach, some organizations andinstitutions are more important from the SID perspective -for example organizations and institutions that handleincremental/product innovations, low/medium technologysector innovations and absorption/diffusion of innovations● Cooperation between different organizations andinstitutions is crucial● Public policies have a considerably larger importance indeveloping countries than in developed ones(Edquist 2001)
Countries Performances by registered patentsHBC Managing Innovation Winter Course 2012
A Comparative Analysis of the NationalInnovation Performance (example of Balticcountries)Paas & Poltimäe (2010)
NIS ImplementationFinnish NIS : Developed Country, SmallState, Europe.Indonesian NIS : Developing Country,Large State, South East AsiaChinese NIS : Developing Country, LargeState, East Asia
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ReferencesGeorghiou, L. 2006. “Effective innovation policies for Europe – the missing demand-side”. Paper onGlobalisation Challenges for Europe and Finland organised by the Secretariat of the Economic Council.Available at http://vnk.fi/hankkeet/talousneuvosto/tyo-kokoukset/globalisaatioselvitys-9-2006/artikkelit/Georghiou_06-09-20.pdf (Accessed 22 May 2013)HBC Managing Winter Course. 2012. Where in the world is innovation? Available at http://blog.hbs.edu/hbsinov8/?p=988 (Accessed 22 May 2013)Kalvet, T. 2005. Innovation and National Innovation Systems: General Framework and The Case ofEstonia. Praxis Center for Policy Studies. Available at http://www.euregio-heltal .org/sites/default/files/Innovation_and_National_Innovation_Systems-_General_Framework_and_the_Case_of_Estonia.pdf (Accessed 21 May 2013)Lakitan, B. 2011. National Innovation System in Indonesia. Annual Meeting of Science and TechnologyStudies, Tokyo Institute of Technology, 10-12 June 2011.Liu, Xielin & S. White. Comparing Innovation System: a framework and application to Chinastransitional context. Research Policy 30 (2001) 1091-1114.Lundvall, B.A. (ed). 1992. National Systems of Innovation: Towards a Theory of Innovation andInteractive Learning. London : Pinter.Manley, K. 2003. Frameworks for understanding interactive innovation processes. International Journalof Entrepreneurship and Innovation, 4(1), 25-36.
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