dr. shahram yazdani innovation system shahid beheshti university of medical sciences school of...

Dr. Shahram Yazdani

Innovation System

Shahid Beheshti University of Medical SciencesSchool of Medical Education

Strategic Policy Sessions: 06

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Industrial vs. Knowledge-Base Economies

Since the beginning of the 1970s, the most advanced economies in the world have been undergoing structural change, turning them from industrialized economies based on labor, tangible capital and material resources into economies based more and more on the creation, diffusion and exploitation of new knowledge.

One of the fundamental characteristics of this shift is the structural intensification of research activities.

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Knowledge as a Strategic Asset

In the emerging ‘knowledge-based economy’, also called ‘learning’ economy, economic growth depends more directly on investment in knowledge, which increases productive capacity, than on traditional factors of production (Lundvall and Johnson, 1994).

In other words, knowledge raises the returns on and the accumulation of other types of investment (Nelson and Romer, 1996).

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Definitions of Knowledge-Based Economy

APEC: a KBE is an economy in which the production, distribution and use of knowledge are the main drivers of growth, wealth and employment across all industries.

OECD: where investment in knowledge is defined as public and private spending on higher education, expenditure in R&D and investment in software.

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Timing of Adoption

It often takes a long time for Technology to move from lab. to commercial value: Freon refrigerants - 1 year Zipper - 27 years Mechanical cotton picker - 53 years Fluorescent lamp - 79 years

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Shortening of cycles of late innovations: Spread of successive technologies in the US automobile industry

Percentage of output incorporating the innovation

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The Geographic Outspreading of Technologies as They Mature

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The Importance of Systems

Despite similarly large investments in R&D by various industrialized and semi-industrialized countries starting in the 1950’s and 60’s “evidence accumulated that the rate of technical change and of economic growth depended more on efficient diffusion than on being first in the world with radical innovations and as much on social innovations as on technical innovations” (Freeman, 1995).

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Tacit vs. Codified knowledge

Codified scientific and technological information, are disembodied knowledge (in articles, blueprints, patents, software and databases), a so-called “nonrival public good”

Tacit knowledge (skills, competencies, routines) is acquired through experience (learning, producing, researching) and consists of the accumulation of human skills and techniques.

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Propositional and Prescriptive Knowledge

Knowledge that catalogues natural phenomena and regularities (“knowledge of what”), which is called propositional knowledge.

Knowledge that prescribes certain actions that constitute the manipulation of natural phenomena for human material needs (“production”) and which is called prescriptive knowledge.

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Discovery vs. Invention

When an addition is made to the base of propositional knowledge, it is typically called discovery.

When an addition is made to the base of prescriptive knowledge, it is typically called invention.

When prescriptive knowledge is carried out, it is termed production.

In prescriptive knowledge, there is always a tacit component.

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Technology

Technology is the know-how on how to apply scientific knowledge. As such it belongs to a larger group of activities which embrace the creation and use of artifacts, crafts and items of knowledge as well as various forms of social organization (Grupp, 1998).

It is important to distinguish between technological change and scientific advance.

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Science and Technology

Science includes processes of knowledge creation and diffusion.

Technology on the other hand focuses on the application or usage of the created knowledge.

The research process is of major importance for building and using knowledge for the materialization of innovations.

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Basic Research

Basic research or fundamental research refers to experimental or theoretical work geared ‘primarily’ to the acquisition of new knowledge about the basic origin of phenomena and observable events without targeting a particular application of use.

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Applied Research

Applied research is biased towards specific and practical purposes or objectives.

It also includes a new knowledge generation process but always in regard of the practical application. The results of applied research are intended to be valid for a limited range of products of processes.

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Experimental Development

Experimental development is systematic work structured on existing knowledge which is directed towards production of new materials, products, equipment or the installation of new processes, systems or services.

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Academic vs. Industrial Research

The largest part of academic research is concentrated in basic research, although applied research efforts are also undertaken to a considerable extent in many academic departments

Industrial research and development is mainly concerned with the design and development of artifacts, directed at the more practical application.

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Academic vs. Industrial Research

Over the years, this distinction has become more and more obsolete. Applied R&D activities are also performed by academic researchers, while industry is involved in basic research to a greater extent.

Furthermore, there is a strong interaction between academic and industrial research, reinforcing each other's capacity to solve complex problems.

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Definition of Innovation

Innovation is the ability to manage knowledge creatively in response to market-articulated demands and other social needs.

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Innovation results from complex interactions between research, design, production and marketing that take place in a web of interactive learning within and among firms and other knowledge organisations.

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“New combinations“ of previously not connected ideas, knowledge, technologies or markets.

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Innovation as a matching engine

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The Innovation Process

Basic Research

Propositional Knowledge

Discovery

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Basic Research

Applied Research


Prescriptive Knowledge

(Technology)

Discovery

Invention

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Basic Research

Applied Research

Product &Process



(Technology)

Discovery

Invention

Design &Development

Patenting

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Basic Research

Applied Research

Product &Process



(Technology)

Discovery

Invention

Design &Development

MarketingUsage &

Application

Patenting

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The Definition

The phrase “system of innovation” is used for describing the many interactions among many participating institutions, organisations and firms, most of which “formally” operate independently of each other.

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The Goal of an Innovation System

The goal of an innovation system is to develop, diffuse and utilize innovations.

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Elements of Innovation System Policy Bodies

Central policy and financing agencies Relevant Parliamentary or Governmental Committees Government agencies for technology diffusion and incubation Economic development agencies in government

Regulatory Bodies Ethics bodies, Registration, and patent offices

Research and Development Institutes Government Research institutes Private non-profit Research Organizations Corporate R&Ds R&D Performing Firms

Business Enterprises Large local corporations SMEs Business associations

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Elements of Innovation System Education and Training institutions

Universities Technical Colleges Primary and secondary schools

Non-financial Support Organizations Public Technology Transfer Agencies Public Innovation Advisory Agencies Science and Technology Parks Technology Incubators

Financial Support Organizations Commercial Banks Venture capitalists

Organized Civil Society Labour unions, especially those dealing with technical change NGOs delivering technical services Policy advisory bodies interested in

technical change Professional and Academic Societies

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Types of systems of innovation

Over the nearly two decades since the emergence of the national innovation systems paradigm, a number of other system level analyses have emerged.

The different systems frameworks can be defined as follows: National innovation systems Regional innovation systems Clusters Sectoral innovation systems Technological systems of innovation

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Definition of NIS (Freeman, 1987)

“The network of institutions in the public- and private-sectors whose activities and interactions initiate, import, modify and diffuse new technologies”

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Definition of NIS (Lundvall, 1992)

“The elements and relationships which interact in the production, diffusion and use of new, and economically useful knowledge... and are either located within or rooted inside the borders of a nation state”

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Key objectives of an innovation policy:

Building an innovation culture Enhancing technology diffusion Promoting networking and clustering Leveraging research and development Responding to globalization

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Functions of NIS (Galli and Teubal 1997)

Hard functions1. R&D activities (public) and 2. the supply of scientific and technical services to third

parties (business sector and public administration). Soft functions:

1. diffusion of information, knowledge and technology; 2. Policy making; 3. design and implementation of institutions concerning

patents, laws, standards, etc.; 4. diffusion of scientific culture, and 5. professional coordination.

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Functions of NIS (Rickne, 2000) to create human capital; to create and diffuse technological opportunities; to create and diffuse products; to incubate in order to provide facilities, equipment, and

administrative support, to facilitate regulation for technologies, materials, and products that

may enlarge the market and enhance market access; to legitimize technology and firms; to create markets and diffuse market knowledge; to enhance networking; to direct technology, market, and partner research; to facilitate financing; and to create a labor market that [can be utilized].

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Functions of NIS (Johnson 2001) Supply incentives for companies to engage in innovative

work Supply resources (capital + competence) Guide the direction of search (influence the direction in

which actors deploy resources) Recognize the potential for growth (identifying

technological possibilities and economic viability) Facilitate the exchange of information and knowledge Stimulate / create markets Reduce social uncertainty (i.e. uncertainty about how

others will act and react) Counteract the resistance to change that may arise in

society when an innovation is introduced (provide legitimacy for the innovation)

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Silicon Valley

In sixty years, the 50 mile strip from San Francisco-Berkeley to San Jose, California has grown to over 7,000 electronics and software companies with a market value of $ 450 billion.

Its 300,000 top scientists include some one-third born abroad.

A dozen new firms (and dozens of new millionaires through IPOs) are created each week.

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Hubs of Technological Innovation

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Analysis of the foci of various systems of innovation frameworks

More specific

Less specific

More specificLess specific

System Actors / Agent

Place

National Innovation

System

Regional Innovation

System

Innovation Clusters

Sectoral Innovation

System

Technological Systems of Innovation

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Definition of Clusters

a concentration of competing, collaborating and interdependent companies and institutions which are connected by a system of market and non-market links.

customers, suppliers, competitors and other supporting institutions such as universities, colleges, research bodies, financial institutions and the utilities

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More specific

Less specific



Place

National Innovation

System

Innovation Clusters

Sectoral Innovation

System



Regional Innovation

System

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Definition of regional innovation system

A set of interacting private and public interests, formal institutions and other organizations that function according to organizational and institutional arrangements and relationships conducive to the generation, use and dissemination of knowledge.

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Definition of regional innovation system

This set of actors produce pervasive and systemic effects that encourage firms within the region to develop specific forms of capital that is derived from social relations, norms, values and interaction within the community in order to reinforce regional innovative capability and competitiveness.

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More specific

Less specific



Place

National Innovation

System

Regional Innovation

System

Innovation Clusters

Sectoral Innovation

System


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This concept implies that there are many technology specific innovation systems within a country and that each technological system is unique in its ability to develop and diffuse newtechnology.

Technology-specific Innovation System

(Jacobsson and Johnson 2000)

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Boundary relations between National, Sectoral, and Technology Specific Innovation Systems

National Innovation System

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Sectoral Innovation System





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Technology Specific Innovation System

Technology Specific Innovation System

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Dynamics of technology specific innovation systems

In the case of technology specific innovation systems, the number of actors, networks and relevant institutions is much smaller than in a NSI, which reduces the complexity.

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The Changing Scientific Roots of Innovation

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NISs

DevelopedNISs

DevelopingNISs

Structuring NISs

Unformed NISs

Emerging NISs

Catching UpNISs

Larger Developed NISs

High Tech Smaller NISs

Services Oriented NISs

Natural Resources Based NISs

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Larger OECD economies. These NISs are doing relatively better on innovation than in diffusion. Scale effect might be present in explaining a relatively high performance on innovation.

NISs

DevelopedNISs

DevelopingNISs

Structuring NISs

Unformed NISs

Emerging NISs

Catching UpNISs





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France, Germany, Italy, Japan, Korea, Taiwan, UK, US

NISs

DevelopedNISs

DevelopingNISs

Structuring NISs

Unformed NISs

Emerging NISs

Catching UpNISs





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They are small open economies with a high degree of specialization, and are much more concentrated on high tech manufactures. Moreover they are doing very well in both innovation, diffusion and intangible accumulation.

NISs

DevelopedNISs

DevelopingNISs

Structuring NISs

Unformed NISs

Emerging NISs

Catching UpNISs





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Finland, Ireland, Netherlands, Singapore, Sweden, Switzerland

NISs

DevelopedNISs

DevelopingNISs

Structuring NISs

Unformed NISs

Emerging NISs

Catching UpNISs





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Economies tend to be very specialized in quite different types of production, ranging from low to high tech, and their services sectors play a very significant role in their international specialization.

NISs

DevelopedNISs

DevelopingNISs

Structuring NISs

Unformed NISs

Emerging NISs

Catching UpNISs





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Denmark, Belgium, Luxembourg, Hong Kong

NISs

DevelopedNISs

DevelopingNISs

Structuring NISs

Unformed NISs

Emerging NISs

Catching UpNISs





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Economies characterized by good natural resources endowments (grazing land, oil and other minerals,...) and which display an international specialization reflecting that fact. When comparing with other developed NISs, these systems tend not to perform very well both on innovation and diffusion.

NISs

DevelopedNISs

DevelopingNISs

Structuring NISs

Unformed NISs

Emerging NISs

Catching UpNISs





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Australia, New Zealand, Norway, Austria, Canada, Spain

NISs

DevelopedNISs

DevelopingNISs

Structuring NISs

Unformed NISs

Emerging NISs

Catching UpNISs





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NISs

DevelopedNISs

DevelopingNISs

Structuring NISs

Unformed NISs

Emerging NISs

Catching UpNISs





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Hungary, Czech Republic, Malaysia, Malta, Slovenia, Slovak Republic, Estonia, Greece, Lithuania, Latvia, Poland, Portugal, Ukraine

NISs

DevelopedNISs

DevelopingNISs

Structuring NISs

Unformed NISs

Emerging NISs

Catching UpNISs





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Argentina, Brazil, Bulgaria, Chile, China, Columbia, Cyprus, Egypt, India, Indonesia, Mexico, Peru, Philippines, Russia, South Africa, Romania, Thailand, Turkey, Venezuela

NISs

DevelopedNISs

DevelopingNISs

Structuring NISs

Unformed NISs

Emerging NISs

Catching UpNISs





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NISs

DevelopedNISs

DevelopingNISs

Structuring NISs

Unformed NISs

Emerging NISs

Catching UpNISs





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Algeria, Bangladesh, Congo, Ethiopia, Iran, Kenya, Sudan, Myanmar, Nigeria, Pakistan, Tanzania, Viet Nam, Colombia,

NISs

DevelopedNISs

DevelopingNISs

Structuring NISs

Unformed NISs

Emerging NISs

Catching UpNISs





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The ActivityBasicResearch

BasicResearch

AppliedResearchApplied

ResearchProduct Design &

DevelopmentProduct Design &

Development ManufacturingManufacturing

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The Outcome ProductProductPropositionalKnowledge

PropositionalKnowledge

PrescriptiveKnowledgePrescriptiveKnowledge


BasicResearch





Pre-productionPrototype


EngineeringPrototype


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The Outcome

The FirmNew FirmNew Firm Mature SMEMature SME Large CompanyLarge Company

ProductProduct

Business PlanBusiness Plan





BasicResearch









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The Outcome

The Firm

The Role

New FirmNew Firm Mature SMEMature SME Large CompanyLarge Company

ProductProduct

ResearcherResearcher InventorInventor EntrepreneurEntrepreneur BusinessmanBusinessman

Business PlanBusiness Plan





BasicResearch









Thank You !

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dr. shahram yazdani innovation system shahid beheshti university of medical sciences school of...

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