incremental innovation by jan fransen
TRANSCRIPT
IHS Masterpresentation 112-01-2010
…. the leading role of SME’s
Jan FransenSeptember 2013, ICID
Incremental innovation
Innovation for development 2Sep 2013
Content
What is incremental innovation? Why does it matter for Indonesia? How to build local capacity, to bring people along?
Firm: absorptive capacity; R&D Local innovation system and local context Global value chains
3
What (Jensen et al, 2007)
Sep 2013Innovation for development
Science Technology Innovation Doing
Using
Interacting
4
WhyHard and soft technology
From imitation to innovation
Incremental innovation
Absorptive capacity needed & developed
Technology gap reduces
Local knowledge becomes more important
Proces often starts in low tech sectors
Sep 2013Innovation for development
Innovation for development 5
Why Incremental innovation leads to economic rents
SME’s innovate, often incrementally90% of all firms, 2/3rd employment, > 0.5 value added
Flexible and resilient
Low cost innovations
Sep 2013
Shu
mpe
ter Fragmentation
Segmentation
IHS Masterpresentation 6
Why
Summary
Incremental innovation is needed for ‘transformation of society’ (Stiglitz) and ‘capability expansion’ (Amartya Sen)
12-01-2010
Woodware
Woodworks
Silverware
Bambooware
Ceramics
Stoneware
Paper, plaiting
Home accessories in Yogyakarta
Out of AsiaOut of AsiaOut of Asia
Institutional support?
InnovationAbsorptive capacity
Firm
R&D
How: start with the firm
Absorptive capacity
Access Knowledge gap
Education & training
Attracting high educated
Realization
BDS
Venture capital
Improved ‘90s
LIS immature
Improved since ’66 & ’00
Ease of doing business: 128
Focus?
External sources Acquire Assimilate Transform Exploit
RealisedPotential
Innovation
Local Innovation system
Global value chain
Absorptive capacity
Firm
R&D
How
11
External sources
12-01-2010IHS Masterpresentation
Sub-contractor
Global buyer
Raw material
Equipm’t Tools
Materials
PeriodicalsInternet Trade fairs
CoCBus.Ass.Gov’tUniv.Banks
Local Innovation System
Public sources
Global Value Chain
Exporter
Local innovation systemMetropolitan
Incomplete context
Immaturity
FirmsNon firms
Embedding in value chains with
specific roles
13Sep 2013Innovation for development
Global Value ChainsOpportunities and trends
Segmentation and fragmentation
Open innovation
Environmental laws
Large suppliers gain control
Larger exporters as gate keepers
Demand, FDI, MNC relocates
Impact on SME’s In Indonesia?
Buyer– supply driven chains
15
Conclusion1. Incremental innovation of SME’s is key to inclusive
development2. Systemic, multi-scalar, multi actor institutional support
People: education & training Firm: BDS, venture capital, ease of doing business LIS: Non firm actors in maturing local innovation systems
Responsiveness to rapid changes Global value chains: inclusion
3. Trends: a rat race? Indonesia is closing the knowledge gap Small differences become more important Global value chains focus on large specialized suppliers and exporters Geography of the market changes towards emerging economies
Sep 2013