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Theme 4
Positions: The National and
Competitive Environment
Managing Innovation
Outline
1. An innovation system approach
2. National Systems of Innovation
3. Global Innovation Index 2015
An innovation system approach
 An innovation system:
 can be defined as a group of private firms, public
research institutes, and several of the facilitators of
innovation,
 who in interaction promote the creation of one or a
number of technological innovations [within a framework
of] institutions…
 which promote or facilitate the diffusion or application of
these technological innovations
An innovation system approach
The different SI approaches can be characterized and
compared by investigating how they deal with the
following six dimensions
System
boundaries
Actors and
networks
Institutions
Knowledge Dynamics
Policy
implications
An innovation system approach
 SI approaches share certain characteristics:
 Focus on innovation and they all place great emphasis on
the learning process in which all actors involved,
experience a 'learning‐by‐doing' process or learn from
each other by exchanging knowledge.
 Systems of innovation are always defined as complex
systems, stressing their non‐linear, systemic, interactive
and evolutionary character
 The performance of all SI approaches is analyzed in a
similar way, namely through historical analyses of
economic or innovative activity and knowledge diffusion.
National Systems of Innovation
Chris Freeman
1987
Bengt-Åke Lundvall
1992
Richard Nelson
1993
An innovation system approach
 4 elements of the Japanese NSI:
 the role of policy (in particular the role of the Ministry of
International Trade and Industry)
 the role of corporate research and development (R&D) in
accumulating knowledge and developing advantages
from it
 the role of human capital, the organization of work and
the development of related capabilities
 the role of industrial conglomerates in being able to profit
from innovations emerging from developments along the
entire industrial value chain
An innovation system approach
National Systems of Innovation building blocks
according to Lundvall (1992)
An innovation system approach
National Systems of Innovation according to Soete
(2012)
NationalSystemsof
Innovation
Sourse of innovation
Institutions
Interactive Learning
Interaction
Social capital
An innovation system approach
Source of innovation
Classical economics approaches to innovation had relied
mostly on an analysis of R&D. However, it is not only R&D
that is crucial in innovation. Producer‐consumer relations
provide a source of innovation, as do the purchase and
availability of equipment and the training of workers. Thus
innovation occurs in production, distribution, and
consumption
An innovation system approach
Institutions
Market and non‐market institutions constitute the national
innovation system, providing the framework for
governments to implement policies in order to influence the
process of innovation.
In a country without reliable governance structures,
somebody with the same talent who works just as diligently
might still end up extremely poor. The importance of
institutions must therefore not be underestimated.
An innovation system approach
It emphasizes the importance of continuous learning in
order to adapt to changes. This also demonstrates the
connection of the NSI (National System of Innovation) to
concepts such as human resource management, labour
market institutions and learning capacities of firms as well
as to absorptive capacities of firms and the economy as a
whole.
Interactive Learning
An innovation system approach
Since innovation is considered to take place almost
exclusively within interaction, successful systems of
innovations are capable of producing an environment of
continuous knowledge production, knowledge use and
innovation.
However, the interaction is mostly coordinated by
institutions and thus an institutional environment which
leads to inefficient coordination of interactions may cause
failure of the whole innovation system.
Interaction
An innovation system approach
It is argued that, the greater the degree to which
institutions in a system are advanced, the more social
capital in the form of trust they show. Trust in turn has a
positive influence on the rate of innovation since trust
reduces the risk that accompanies innovation and
especially the risk of financing innovation
Social capital
: The National Systems of Innovation Concept
National Systems of Innovation
Strong local ‘demand pull’ for certain types of
product generates innovation opportunities for local
firms, especially when the demand depends on
face-to-face interactions with customers.
Patterns of national demands
National Systems of Innovation
Factors in Examples
Local buyers’ tastes • Quality food and clothing in France and Italy
• Reliable machinery in Germany
Private investment
activities
• Automobile and other downstream investments
stimulating innovation in computer-aided design and robots
in Japan, Italy, Sweden and Germany
Public investment
activities
• Railways in France
• Medical instruments in Sweden
• Coal-mining machinery in the UK (<1979)
Input prices • Labour-saving innovations in the USA
• Europe–USA differences in automobile technology
• Environmental technology in Scandinavia
Local natural
resources
• Innovations in oil and gas, mineral ores, and food
and agriculture in North America, Scandinavia and
Australia
National Systems of Innovation
Case studies and statistical analysis show that
competitive rivalry stimulates firms to invest in
innovation and change, since their very existence
will be threatened if they do not.
Lack of competitive rivalry makes firms less fit to
compete on global markets through innovation.
Competitive rivalry
National Systems of Innovation
In many countries, national advantages in natural
resources and traditional industries have been
fused with related competencies in broad
technological fields that then become the basis for
technological advantage in new product fields.
Competencies in Production and Research
National Systems of Innovation
National Systems of Innovation
Firms’ innovative behaviours are strongly influenced
by the competencies of their managers and the
ways in which their performance is judged and
rewarded (and punished).
Institutions: Finance, Management and
Corporate Governance
National Systems of Innovation
1. They will be the sources of firms with a strong
capacity to compete through innovation.
2. They are also potential sources of improvement
in the corporate management of innovation, and in
national systems of innovation.
3. Firms can benefit more specifically from the
technology generated in foreign systems of
innovation.
Learning from Foreign Systems of Innovation
National Systems of Innovation
Outside sources of technical knowledge for large European
firms: percentage judging the source as very important
Global Innovation Index 2015
Global Innovation Index 2015
Ukraine Ranks #33 In Top 50 Innovative Countries 2015
Ukraine has made a huge leap in Bloomberg's Annual Global
Innovation Index 2015: in just one year, our country has jumped from
49th to 33rd spot and left behind such innovative countries as Hong
Kong, Iceland, Brazil, Turkey and others.
Global Innovation Index 2015
t's also interesting to note that Ukraine is currently featured
among Top 5 Countries by IT education.
Global Innovation Index 2015
And this year, Ukraine is also in Top 10 Countries by the
number of high-tech patents filings per 1 million population
and per $1 million of R&D spent.

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2016 - Lecture 4 position the national and competitive environment

  • 1. Theme 4 Positions: The National and Competitive Environment Managing Innovation
  • 2. Outline 1. An innovation system approach 2. National Systems of Innovation 3. Global Innovation Index 2015
  • 3. An innovation system approach  An innovation system:  can be defined as a group of private firms, public research institutes, and several of the facilitators of innovation,  who in interaction promote the creation of one or a number of technological innovations [within a framework of] institutions…  which promote or facilitate the diffusion or application of these technological innovations
  • 4. An innovation system approach The different SI approaches can be characterized and compared by investigating how they deal with the following six dimensions System boundaries Actors and networks Institutions Knowledge Dynamics Policy implications
  • 5. An innovation system approach  SI approaches share certain characteristics:  Focus on innovation and they all place great emphasis on the learning process in which all actors involved, experience a 'learning‐by‐doing' process or learn from each other by exchanging knowledge.  Systems of innovation are always defined as complex systems, stressing their non‐linear, systemic, interactive and evolutionary character  The performance of all SI approaches is analyzed in a similar way, namely through historical analyses of economic or innovative activity and knowledge diffusion.
  • 6. National Systems of Innovation Chris Freeman 1987 Bengt-Åke Lundvall 1992 Richard Nelson 1993
  • 7. An innovation system approach  4 elements of the Japanese NSI:  the role of policy (in particular the role of the Ministry of International Trade and Industry)  the role of corporate research and development (R&D) in accumulating knowledge and developing advantages from it  the role of human capital, the organization of work and the development of related capabilities  the role of industrial conglomerates in being able to profit from innovations emerging from developments along the entire industrial value chain
  • 8. An innovation system approach National Systems of Innovation building blocks according to Lundvall (1992)
  • 9. An innovation system approach National Systems of Innovation according to Soete (2012) NationalSystemsof Innovation Sourse of innovation Institutions Interactive Learning Interaction Social capital
  • 10. An innovation system approach Source of innovation Classical economics approaches to innovation had relied mostly on an analysis of R&D. However, it is not only R&D that is crucial in innovation. Producer‐consumer relations provide a source of innovation, as do the purchase and availability of equipment and the training of workers. Thus innovation occurs in production, distribution, and consumption
  • 11. An innovation system approach Institutions Market and non‐market institutions constitute the national innovation system, providing the framework for governments to implement policies in order to influence the process of innovation. In a country without reliable governance structures, somebody with the same talent who works just as diligently might still end up extremely poor. The importance of institutions must therefore not be underestimated.
  • 12. An innovation system approach It emphasizes the importance of continuous learning in order to adapt to changes. This also demonstrates the connection of the NSI (National System of Innovation) to concepts such as human resource management, labour market institutions and learning capacities of firms as well as to absorptive capacities of firms and the economy as a whole. Interactive Learning
  • 13. An innovation system approach Since innovation is considered to take place almost exclusively within interaction, successful systems of innovations are capable of producing an environment of continuous knowledge production, knowledge use and innovation. However, the interaction is mostly coordinated by institutions and thus an institutional environment which leads to inefficient coordination of interactions may cause failure of the whole innovation system. Interaction
  • 14. An innovation system approach It is argued that, the greater the degree to which institutions in a system are advanced, the more social capital in the form of trust they show. Trust in turn has a positive influence on the rate of innovation since trust reduces the risk that accompanies innovation and especially the risk of financing innovation Social capital
  • 15. : The National Systems of Innovation Concept
  • 16. National Systems of Innovation Strong local ‘demand pull’ for certain types of product generates innovation opportunities for local firms, especially when the demand depends on face-to-face interactions with customers. Patterns of national demands
  • 17. National Systems of Innovation Factors in Examples Local buyers’ tastes • Quality food and clothing in France and Italy • Reliable machinery in Germany Private investment activities • Automobile and other downstream investments stimulating innovation in computer-aided design and robots in Japan, Italy, Sweden and Germany Public investment activities • Railways in France • Medical instruments in Sweden • Coal-mining machinery in the UK (<1979) Input prices • Labour-saving innovations in the USA • Europe–USA differences in automobile technology • Environmental technology in Scandinavia Local natural resources • Innovations in oil and gas, mineral ores, and food and agriculture in North America, Scandinavia and Australia
  • 18. National Systems of Innovation Case studies and statistical analysis show that competitive rivalry stimulates firms to invest in innovation and change, since their very existence will be threatened if they do not. Lack of competitive rivalry makes firms less fit to compete on global markets through innovation. Competitive rivalry
  • 19. National Systems of Innovation In many countries, national advantages in natural resources and traditional industries have been fused with related competencies in broad technological fields that then become the basis for technological advantage in new product fields. Competencies in Production and Research
  • 20. National Systems of Innovation
  • 21. National Systems of Innovation Firms’ innovative behaviours are strongly influenced by the competencies of their managers and the ways in which their performance is judged and rewarded (and punished). Institutions: Finance, Management and Corporate Governance
  • 22. National Systems of Innovation 1. They will be the sources of firms with a strong capacity to compete through innovation. 2. They are also potential sources of improvement in the corporate management of innovation, and in national systems of innovation. 3. Firms can benefit more specifically from the technology generated in foreign systems of innovation. Learning from Foreign Systems of Innovation
  • 23. National Systems of Innovation Outside sources of technical knowledge for large European firms: percentage judging the source as very important
  • 25. Global Innovation Index 2015 Ukraine Ranks #33 In Top 50 Innovative Countries 2015 Ukraine has made a huge leap in Bloomberg's Annual Global Innovation Index 2015: in just one year, our country has jumped from 49th to 33rd spot and left behind such innovative countries as Hong Kong, Iceland, Brazil, Turkey and others.
  • 26. Global Innovation Index 2015 t's also interesting to note that Ukraine is currently featured among Top 5 Countries by IT education.
  • 27. Global Innovation Index 2015 And this year, Ukraine is also in Top 10 Countries by the number of high-tech patents filings per 1 million population and per $1 million of R&D spent.