incremental innovation by jan fransen

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12-01- 2010 IHS Masterpresentation 1 …. the leading role of SME’s Jan Fransen September 2013, ICID Incremental innovation

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Page 1: Incremental Innovation by Jan Fransen

IHS Masterpresentation 112-01-2010

…. the leading role of SME’s

Jan FransenSeptember 2013, ICID

Incremental innovation

Page 2: Incremental Innovation by Jan Fransen

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

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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

Page 6: Incremental Innovation by Jan Fransen

IHS Masterpresentation 6

Why

Summary

Incremental innovation is needed for ‘transformation of society’ (Stiglitz) and ‘capability expansion’ (Amartya Sen)

12-01-2010

Page 8: Incremental Innovation by Jan Fransen

InnovationAbsorptive capacity

Firm

R&D

How: start with the firm

Page 9: Incremental Innovation by Jan Fransen

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

Page 10: Incremental Innovation by Jan Fransen

Innovation

Local Innovation system

Global value chain

Absorptive capacity

Firm

R&D

How

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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

Page 12: Incremental Innovation by Jan Fransen

Local innovation systemMetropolitan

Incomplete context

Immaturity

FirmsNon firms

Embedding in value chains with

specific roles

Page 13: Incremental Innovation by Jan Fransen

13Sep 2013Innovation for development

Page 14: Incremental Innovation by Jan Fransen

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

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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