From innovation as an interactive process to innovation systems and - - PowerPoint PPT Presentation

From innovation as an interactive process to innovation systems and development strategies

Bengt-Åke Lundvall Aalborg University Globelics Academy May 20 2013 Tampere

Structure of my presentation

• Interactive learning is at the core of innovation

studies.

• Innovation system concept is based upon micro

foundation of interactive learning

• Narrow and broad definitions of national

innovation systems

• For less developed countries we must operate

with broad definitions.

• Some specific challenges for the least developed

innovation systems.

Interactive learning at the theoretical core of Innovation Studies

• The entrepreneurship studies theoretical core according to

Shane (2000) : the key building blocks are respectively the individual and the opportunities that he/she faces. The process

• f entrepreneurship is one where individuals perceive, assess

and act in relation to opportunities.

• The innovation studies core (bal): The focus is upon innovation

as an interactive process. The innovation process is one where individuals or organisations interact engaging in information exchange, problem solving and mutual learning . In this process they establish ‘relationships’ that may be seen as constituting ‘innovation systems’.

Schumpeter’s supply side bias

• Schumpeter had focus on supply side
• First defining the individual entrepreneur as the

most important driver of innovation – In Theory of Economic Development – often referred to as Schumpeter Mark I.

• Second defining the big oligopolist coporations

and their R&D-department as the most important driver of innovation – often referred to as Schumpeter Mark II.

• Schumpeter assumed that users and consumers

would accept and use new processes and

• products. But he did not give them any active
• role. He neglected the demand side.

Schmookler’s challenge – on the importance of the demand side

• Through analysis of time series and cross-

sectional patent data and historical case studies, Schmookler demonstrated that demand-pull influences were also important: the more intense the demand, the more creative groups and individuals were drawn to work on an unsolved problem and the more patentable inventions they generated (Schmookler 1966 and 1972)

Christopher Freeman: The father of modern innovation theory

• Economist from London School of Economics –

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 the interaction

between agents in the innovation process.

• Collaboration with Freeman in the beginning of the

1980s inspired the Mike project – see below.

Nelson, R. (1993): National Innovation Systems: A Comparative Study Porter, M. (1990):The Competitive Advantage

• f Nations

Lundvall, B.-Å. (1992): National Systems of Innovation Cohen, W. and D. Levinthal (1990):Absorptive capacity: A new perspective on learning and innovation Saxenian, A. (1994): Regional Advantage

The core literature 1990-2009 – all the five most cited works in Handbooks on innovation – are about innovation as interactive proces and about innovation systems.

The Modern understanding of the Innovation Process

• Most innovations are outcomes of combinations
• f diverse elements of knowledge.
• Such outcomes reflect interaction among agents

with different insights and skills.

• Interaction is social and reflects formal and

informal institutions.

• The economy is organised and constituted by

social relationships – not just a set of pure markets!

Three different delimitations of innovation systems

• Extended R&D-systems – linking knowledge

institutions to production (Nelson and Mowery).

• Extended production systems – focus on learning by

doing, using and interaction in the production system (Freeman and Aalborg-group).

• Extended production and competence building

systems – + linking education and labour market systems to innovation (Lundvall 2002) – ICS in globelics stands for innovation and competence building systems!

A broad definition of national innovation systems

”The national innovation system is an open, evolving and complex system that encompasses relationships between and within organizations, institutions and socio-economic structures which determine the rate and direction of innovation and competence building emanating from processes of science based as well as experience based learning”

Theoretical underpinnings/stylized facts

• Innovation is a process that is:
• Cumulative – From Babbage to Shockley
• Path dependent – Making electronics components smaller
• Context dependent – Different innovation styles in UK and

Japan and between sectors and regions

• Interactive – Firms do seldom innovate alone
• Innovation and learning
• You learn from what you do
• Innovation with knowledge as input and as joint production of

innovation and competence as outputs

• Learning is a socially embedded process – social capital

matters!!

Microfoundations of NSI

1. Interaction across markets – user-producer interaction as interoganisational learning 2. Interaction at work – modes of organisation and

• rganisational learning

3. Social capital is crucial for the valorisation om intellectual capital 4. Social capital is highly nation-specific

The theoretical perspective on know-how knowledge as localized

• Distinction between information and skill – know-about

and know-how – is crucially important

• Competence and skill are always partially local since they

are partially tacit – moving people helps!

• Competence is layered in people and organisations but

not least in the relationships between people and

• rganisations (rejection of methodological individualism)
• moving people is not enough!
• Only full codification leading to complete deskilling of

doers and thinkers would make knowledge completely rootless (neo-classical world). Impossible in a context of

• n-going innovation.

Some major challenges for NSI- research

Understand learning processes underpinning innovation

• Modes of learning and their interaction
• Informal factors affecting learning and innovation and the interplay

with legal systems and formal institutions (cf. Imitation syndrome and Intellectual property rights in China)

• Links between learning and development

Specifying the development challenge

• Distinction between catching up/emerging (middle

income) and ’innovating out of poverty’ (low income).

• In catching-up absorptive capacity in high tech sectors is

crucial.

• In low income countries dynamising/reorganising the

informal sector and upgrading low-tech and natural ressource based sectors is crucial. Upgrading skills with close connection between schooling and experience is important in both contexts. But also a need to stimulate the demand for knowledge!

Fundamental research questions linking innovation to development

• The potential of Science-based Below the Radar

innovation (Telecom in China, Automobiles in India)

• The role of FDI and other mechanisms for knowledge

spill-overs – the global competition for talent.

• The role of innovation and competence building in the

informal sector

• The role of natural resources
• The role of government and the nation state (the state

as mobiliser of resources and organiser of national innovation system).

Specifying the development challenge for low income countries

• Start from what you have got: Agriculture, Raw material,

Tourism, Informal sector, Donor dependence, Increasing presence of China and India. And a lot of problems (=opportunities??). Weak infrastructure but a growing and young population with ambitions.

• Education and investment in science remain
• fundamental. But increasing the supply of knowledge

without increase in demand does not promote

• development. Innovation increases the demand for

knowledge (Nelson and Phelps, 1966).

Education/learning systems and economic development

• Problem based learning and shift between theory and

practise in education

• Understanding and upgrading everyday learning in

formal and informal sector

• Offering vocational training and apprenticeships to adult

workers and farmers.

• Managing brain-drain and brain-gain – mobilising the

diaspora. STIMULATE THE DEMAND FOR SKILLED FARMERS, WORKERS AND PROFESSIONALS

The new world order and the role of China and India in Africa

• The increasing presence of China and India may be seen

as a threat (neo-colonialism) or as an opportunity (linking up with and learning from the business models of emerging economies).

• Urgent to find ways to manage the presence of China and

India toward constructive innovative solutions and toward knowledge sharing with mutual benefits.

• Export promotion and subcontracting to foreign firms as

ways to link up with ’advanced users’.

Inclusive development and need driven innovation

• Innovation driven growth is never completely

harmonious - innovation is creative destruction. Some will be better off but not everyone. Need for embryonic ’welfare state’ that compensates the losers. A mistake

• nly to promote innovations that include women and

poor people.

• But innovation programs may respond to specific African

needs for infrastructure, communication, health, environment etc. – combination of science, education, technology standards and creative public procurement.

• Such programs should aim at linking up the activities

with market-driven industry and service enterprises.

On the importance of infrastructure

• Support the building of communication infrastructure and

facilitate access to markets domestically, regionally and

• utside the region.
• Weak systems for transport, electricity, water and

telecommunication add to production and distribution costs.

Summing up five questions for African innovation systems

• How to build knowledge platforms so that they become
• rganic sources of innovation and development?
• How to grow or transform ’industrial complexes’ with

roots in agriculture, raw material and tourism?

• How to use engineers as interpreneurs and engineering

as bridge between science and business?

• How to make positive use of the presence of China and

India, as a source of capacity building?

• How to combine social inclusion and sustainability with

innovation driven development.

Final remarks

• Innovation refers to processes where people do new

things or do things in new ways and learn by doing new things.

• Innovation in this broad sense is at the very core of

development in countries at all levels of income.

• Building formal and informal institutions that support

interactive learning is a key challenge!

• The most challenging tasks in low income countries are:
• Mobilising resources to build absorptive capacity through

research, eduation and learning.

• Stimulate the domestic demand for knowledge.

Group work as Double Loop Learning

• What did you learn?
• One question for the professor?
• 1. Individually write down – 5

minutes

• 2. Groupwise discuss in 5 groups -

15 minutes

• 3. Present in class - 5X5 minutes