4.3 National Systems of Innovation and Technology Infrastructure
Technology transfers are influenced greatly by what have been called "national
systems of innovation," which are the networks of institutions that initiate,
modify, import and diffuse new technologies (Freeman, 1987; OECD 1999). The
term "national systems of innovation" started as an analytical tool
but has also become a mobilising concept to drive policy. The term is given
different emphases in the literature. One definition is: "the set of institutions
to create, store and transfer the knowledge, skills and artifacts which define
technological opportunities" (Metcalfe, 1995). National systems of innovation
reflect a complex mixture of institutions (e.g., financial; legal; scientific
and technological; educational), public policies (regarding, e.g., taxation;
export/import promotion; science, technology and innovation), and business and
National systems of innovation depend upon the development of so-called technology
infrastructure, "a set of collectively supplied, specific, industry-relevant
capabilities" such as technology centres and educational and skills development
institutions (Justman and Teubal, 1995, p. 260). "Technology infrastructure
consists of science, engineering and technical knowledge available to private
industry. Such knowledge can be embodied in human, institutional, and facility
forms. More specifically, technology infrastructure includes generic technologies,
infratechnologies, technical information, and research and test facilities,
as well as less technically-explicit areas including information relevant for
strategic planning and market development, forums for joint industry-government
planning and collaboration, and assignment of intellectual property rights.
An important characteristic of technology infrastructure is that it depreciates
slowly, but it requires considerable effort and long lead times to put in place
and maintain." (Tassey, 1991, p.347)
Technology infrastructure may lack direct economic value to any one firm, and
thus individual firms may lack adequate incentives to build technology infrastructure
on their own. Thus policies to develop public technology infrastructure can
build the capabilities that exist elsewhere but need to be imported, adapted,
and absorbed in the local economy. Such policies include stimulating demand
for technological capabilities through awareness-raising programmes and user-need
determination; and building independent sources of such capabilities through
learning-by-doing, training consultants and spinning off independent consulting
services (Justman and Teubal, 1995, p.277). Institutional change and organisational
development are critical to developing technology infrastructure, for example
in promoting specific forms of networks through which capabilities can be acquired
National systems of innovation can influence a multitude of technologies simultaneously.
But each technology may have it's own ''network(s) of agents interacting in
each specific technology area under a particular institutional infrastructure
for the purpose of generating, diffusing, and utilising technology'' (Carlsson
and Stankiewicz, 1991, p.111). These networks may span across national boundaries,
but are still subject to the influence of national culture, institutions, and
policies (Dodgson and Bessant, 1996, p.25). "Empirical work...gives strong
support to the view that it is the overall system and the quality of interconnections
within it which affects successful innovation" (Dodgson and Bessant, 1996,
p.54). And "the pattern of technological innovation depends on much more
than the behaviour of individual firms." (Archibugi and Michie, 1997, p.291).
In addition, there has to be social cohesion for the process to work well, as
Lundvall (1999) states:
today industrial and technology policies must be devised more broadly than
has been the case- the societal framework is imperative for the effects of
the policy. Learning is necessarily an interactive and socially-embedded process.
Without a minimum of social cohesion the capability to master new technologies
and new and more flexible forms of social organisation will be weak (Lundvall,
1999, p. 19-20).
Some explain this new approach in orthodox economic terms as an increased focus
on "social capital", i.e. a recognition that the ways in which
actors organise themselves is important in explaining economic growth and development
(World Bank, 1997b).
Policy interventions can address particular weaknesses in networks and support
social cohesion. Policy objectives are not just to build firms' capabilities,
but to facilitate the whole process of technological innovation by modifying
the form or operation of networks (see Table 4.2).
This can include considerations of finance, marketing, organisation, training,
relationships with customers and suppliers, competitive positioning as well
as the relationship between products and processes. Thus, much of the material
in Chapters 4 and 5 relates indirectly
back to the concepts of national systems of innovation discussed here.
|Table 4.2 Typology of good policy
practices for National Systems of Innovation (Source: OECD, 1999, p.70.)
|Securing appropriate framework conditions
||To develop human resources in S&T
To close market gaps in the financing of innovation
|Reforms to post-secondary education.
Increased government and industry support to professional education.
Establishment of a legal framework for venture capital.
|Building an innovation culture
||To reduce asymmetry in information.
To diffuse best practices in innovation management
To promote the creation of innovative firms.
|Internet-based business information network.
Funding greater use of benchmarking and diagnostic tools
Public investment in venture capital.
|Enhancing technology diffusion
||To increase firms' absorptive capacity
To improve linkages between SMEs and public research
|Co-financing of consultants to upgrade firms' organisational ability.
Co-financing of technology uptake via public/private partnerships
|Promoting networking and clustering
||To simulate the formation of innovative clusters of firms
To ensure a better match between the S&T infrastructure and industry
|Brokering and procurement policies.
Competition among regions for funding of cluster initiatives.
Co-funding of centres of excellence to facilitate university-industry interactions.
Building networks between public research actors and firms.
|Leveraging research and development
||To sustain technological opportunities in the long run.
To increase economic return from public research
|Increased government spending on basic R&D
Increased public support to R&D.
Technology foresight for policy setting.
Regulatory reform (university-industry interface).
|Responding to globalisation
||To increase linkages between domestic and foreign-owned firms
To increase country's attractiveness as a location for knowledge-based activities.
|Building networks of competitive domestic firms.
Building innovative clusters (see above).
Systemic upgrading of the S&T infrastructure
|Improving policy making
||To enhance policy coordination.
To improve policy evaluation
|Raising the coordination function to the highest policy level.
Making evaluation obligatory.
Developing new methodologies
Besides national-level systems of innovation, international (global) and subnational
(regional) levels of innovation merit consideration (Freeman, 1999). One might
think the trend towards globalisation might make national and regional systems
of innovation less significant, but there is a complex interplay between these
levels. New information technologies act as a powerful vehicle for the diffusion
of information across distant communities. However, the process of generating
and diffusing new technologies has been moulded and strengthened by flows of
information and capital. Technology has facilitated globalisation and vice versa;
technological change is both a factor in globalisation and one of its most important
outcomes (Archibugi et al., 1999). Globalisation facilitates transmission of
best-practice techniques and is also a vehicle for the international flow of
goods and services. Because location-specific advantages are still important
to multinational corporations, as they seek market niches with competitive advantages,
these corporations have a major influence on national systems of innovation.
Globalisation is causing the integration of disparate national systems of innovation
that are geographically dispersed and locally specialised (Cantwell, 1999).
The role of the local business environment on the competitive advantages of
firms was already recognised by Porter (1990).
The significance of the sub-national level (region) as a unit for economic analysis
has long been recognised by economic geographers and has also been adopted in
mainstream economics (Krugman, 1991; De Zooten-Dartenset, 1999). It is at the
regional level that informal links between key personnel are formed and maintained
and where economic decisions are most strongly influenced (Howells, 1999). Regional
systems of innovation have been identified not to supplant the national systems
of innovation approach, but rather to recognise that the national unit may be
too large to allow a complete understanding of the dynamics of a technological
system (Howells, 1999 after Metcalfe 1995). A concept similar to regional systems
of innovation called "learning regions" has been used to elaborate
how continuous social and technological learning can be established at the level
of sub-national regions (Asheim, 1998; see Box 4.1).
In a learning region, organisational (social) and institutional innovations
to promote technological cooperation and learning can appear at a regional level
rather than just at a company level. Such innovations can also serve as tools
for regional development. In November 1999, the UK Government announced regional
planning would identify innovative 'high-tech' cluster areas to boost business
and encourage growth (Planning, 1999).
|BOX 4.1: LEARNING REGIONS (ASHEIM, 1998).
| The concept of learning regions should be looked upon as a policy framework
or model for formulations of partnership-based development strategies. All
definitions of the concept emphasise the role played by cooperation and
collective learning in regional clusters and networks understood as regional
development coalitions. By the concept "development coalition"
is meant a bottom-up, horizontally based cooperation between different actors
in a local or regional setting, such as workers and managers within firms
or in a network of firms, but also generally the mobilisation of resources
in a broader societal context as such, to initiate a learning-based process
of innovation, change and improvement.
This definition of a learning region underlines the important role of innovation,
understood as contextualised social processes of interactive learning, which
highlights the significance of building social capital in order to foster
cooperation, as well as transcending the artificial divide between high
tech and low tech industries.
The concept of learning regions has become very popular with several international
organisations, such as the OECD, as a strategy for institutional learning
in order to promote regional development, as it at the same time promises
growth and employment as well as social cohesion.
DG VI of the European Commission has launched learning regions as a policy
instrument; and in Sweden three municipalities have been established as
learning regions, understood as development coalitions, as a part of a bottom-up
Technology transfers, both within a country and betweeen countries, are influenced
greatly by national systems of innovation--the institutional and organisational
structures which support technological development and innovation. Governments
can build or strengthen scientific and technical educational institutions and
modify the form or operation of technology networks: the interrelated organisations
generating, diffusing, and utilising technologies. The presence of regional
and global systems of innovation interacting with national-level systems also
has important implications for policy makers.