regional consultative workshop on nis and ip, islamabad, pakistan, 7-9 oct 20131 innovation systems...
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Regional Consultative Workshop on NIS and IP,
Islamabad, Pakistan, 7-9 Oct 2013 1
Innovation Systems (IS)
Innovation Systems and the Innovation Systems
Conceptual Approach
2
Why Systems? (1/4)
Start with the question of “how innovations come about?”
Becomes clear that innovation in firms depends heavily on external sources The firms themselves are not
responsible for innovating Collective achievement
3
Why Systems? (2/4)
Employing a systems perspective, other relevant factors can also be included: Institutions Political process Public research infrastructure Financial institutions Skills
4
Why Systems? (3/4)
Systems exhibit complementarities among constituent components Complementarity can be understood as
‘linkage(s)’ Absence of one critical complementary
component can block / slow down growth of the system Components can be technical and/or
social
5
Why Systems? (4/4)
Innovation system perspective useful for understanding interaction between innovator and their environment (or context in which they innovate)
Firms depend on the environment in which they innovate and their behavior is shaped by it too (i.e. institutions)
7
Formal Definition of NIS
The set of institutions that (jointly and individually) contribute to the development and diffusion of new technologies
These institutions provide the framework within which governments form and implement policies to influence the innovation process
8
Formal Definition of NIS (cont’d)
As such, an NIS is a system of interconnected institutions to create, store, and transfer the knowledge, skills, and artifacts which define new technologies
Regional Consultative Workshop on NIS and IP,
Islamabad, Pakistan, 7-9 Oct 2013 9
The Innovation Systems Conceptual Approach
10
Use of the (N)IS Approach IS approach grew out of the field of
innovation studies in 1980s Now, widely used by:
Supranational organizations, such as: OECD, EU, UNCTAD, World Bank, IMF
And individual countries, such as: Finland (first country to use it: 1992) Sweden’s ‘Vinnova’ or ‘Systems of Innovation
Authority’ Canada, New Zealand, UK, Hong Kong SAR
11
Two Variations of the IS Conceptual Approach
One: a descriptive tool that permits enumeration of the set of institutions and organizations that contribute to the development and diffusion of new technologies
12
Two Variations of the IS Conceptual Approach (cont’d) Two: A focusing device that points the
factors that influence the development, diffusion, and use of innovations, and, importantly, to an analysis of the intensity and nature of their linkages
Prescriptive dimension: to modify the existing IS by identifying deficiencies in an innovation system and prescribing corrective measures
13
How the IS Approach Prescribes Corrective Measures
By taking an industrialized economy as its model
Based mainly based on comparisons with other economies At a similar level of innovative and
economic development
14
Descriptive Dimension Prescriptive Dimension
What is done? Components of the innovation system are enumerated
Analysis of the system’s components carried out
Why is it done? To identify all factors influencing innovation
To investigate and analyze linkages—including their nature and intensity—between factors influencinginnovation
What are the results? Clearer and more methodicalunderstanding of the systemthat affects innovation
Policy recommendations for government and related agencies
Twin Dimensions of the NIS Conceptual Approach
15
Types of Innovation Systems (and IS Approaches)
Spatial (regional, national) Sectoral Technological
16
Uniqueness of the IS Approach (1/4) Innovations—new creations of economic
significance—are the center of focus, attention, and analysis
IS approach includes, but is broader than, the R&D system alone IS analysis is interdisciplinary in that it
considers non-economic factors, such as institutions, politics, and culture, which can influence the R&D system, but extend well beyond it
17
Uniqueness of the IS Approach (2/4)
IS approach concerned with history Path dependencies and evolutionary
nature of innovations are important Institutions and organizations develop
over time Co-evolution of knowledge and
innovations within organizations and institutions
18
Uniqueness of the IS Approach (3/4)
Process as well as product innovations are important sources of productivity Process and product innovations are not
always clearly separable [ Hong Kong ]
IS approach emphasizes the role of institutions, in addition to organizations
19
Uniqueness of the IS Approach (3/4)
Important organizations = business firms and governments
The behavior of innovating entities is shaped by institutions that constitute constraints or incentives for innovation
i.e. laws, regulations, cultural norms and preferences, social rules, and technical standards
20
4 Advantages of Utilizing the IS Approach
Goes beyond just research and development (R&D) to explain innovation dynamics
Encompasses institutional elements that strongly influence growth dynamics of an IS
21
4 Advantages of Utilizing the IS Approach (cont’d) Recognizes that the organization is not the
sole vector of technological innovation Well suited to analyzing technology policy
By drawing attention to systemic features of the innovation process and their variation across countries, the IS approach cautions against simple policy prescriptions that do not account for cross-national differences among competing systems
22
Disadvantages of the IS Approach (1/3)
What is the correct type and level of analysis: national, regional, sectoral, or technological? Increasing role played by
multinational corporations calls into question the ‘national’ level of analysis
23
Disadvantages of the IS Approach (2/3)
Still a ‘conceptual approach’ rather than a formal theory Too broad, ambiguous and
conceptually diffuse? When so many factors may play a role,
assigning relative weight to particular institutions or relationships is difficult
Not neatly operationalizeable
24
Disadvantages of the IS Approach (3/3) Because the approach is applied to
individual countries on a ‘case-by-case’ basis, elements of an IS may have little in common across geographic boundaries Makes it difficult to carry out effective
transnational comparisons Comparisons between countries may not
always provide useful policy prescriptions
25
Sources of Diversity Between Countries
Country size Country’s level of development Respective roles of the main actors
in innovation processes Such as firms, public and private
research organizations, government Quality and intensity of their
interactions
26
Conclusions
The innovation systems (IS) approach: Provides a tool for analyzing country-
specific features of the innovation process
Guide for policy formulation Highlights interactions among various
actors and the workings of the holistic system rather than the performance of its individual components
Regional Consultative Workshop on NIS and IP,
Islamabad, Pakistan, 7-9 Oct 2013 27
Application of the Innovation Systems Conceptual Approach
28
Application How is the innovation systems
conceptual approach to be applied, in practice? One key drawback is the difficulty of
operationalizing the IS conceptual approach
Illustrated through the case of Hong Kong A small, open, international economy
R&D Expenditure by Performing Sector as % of GDP: 1995-2011
Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
BERD0.11%
0.13%
0.10%
0.12%
0.11%
0.08%
0.08%
0.20%
0.29%
0.36%
0.41%
0.43%
0.37%
0.31%
0.33%
0.32%
0.32%
HERD0.24%
0.25%
0.27%
0.30%
0.34%
0.38%
0.38%
0.38%
0.39%
0.36%
0.37%
0.37%
0.38%
0.39%
0.41%
0.39%
0.37%
GOVERD
0.01%
0.01%
0.01%
0.01%
0.01%
0.01%
0.01%
0.02%
0.02%
0.02%
0.02%
0.02%
0.02%
0.02%
0.03%
0.03%
0.03%
Total (GERD
)
0.36%
0.39%
0.38%
0.43%
0.46%
0.46%
0.47%
0.60%
0.70%
0.74%
0.80%
0.82%
0.77%
0.72%
0.77%
0.75%
0.72%
BERD: Business Expenditure on Research and DevelopmentHERD: Higher Education Expenditure on Research and DevelopmentGOVERD: Government Expenditure on Research and DevelopmentGERD: Gross Domestic Expenditure on Research and Development
29
30
Hierarchical Representation of S&T Actors in HK
Political forum Legislative Council (LegCo)
Policy makers
Government Steering Committee on Innovation and Technology (SCIT)
Innovation and Technology Commission (ITC)
Other bureaux
Financing Government EB Private Sector
ITC -> ITF ARF(ceased) RGC UGC
Operators Universities Public Technology Support Organizations
Private Sector
R&D Centres ASTRI
Facilitators HKPC HKTDC HKSTPC Cyberport HKIB
Commercialization Agents
Business Enterprises
New High Tech Ventures
Multinational Corporations
31
Multi-Dimensional Nature of Hong Kong’s Innovation System
‘Bird’s eye’ view of Hong Kong’s innovation system
Different levels of Hong Kong’s innovation system Government permeates all three
levels of the innovation system Government is still an important player
32
Multi-Dimensional Nature of Hong Kong’s Innovation System
Innovation Actors
Innovation Resource
Flow
Innovation Environment
HKSAR Government
Impact of Innovation
on Economy
33
Three Dimensions of HK’s IS (1/3) Dimension 1: Key Innovation actors and
their linkages [Definition: organizations created with
explicit purpose of promoting or implementing innovation]
Identify the key innovation actors involved in promoting, producing or implementing innovation
Roles that each of these innovation actors play
34
Three Dimensions of HK’s IS (2/3) Dimension 2: Resources and
outcomes Resources refer to:
Financial support Knowledge Technology Human capital
How these resources flow through the system to achieve outcomes
Inputs and outputs
35
Three Dimensions of HK’s IS (3/3) Dimension 3: Innovation Environment
[Definition: totality of common habits, norms, routines, established practices, rules or laws that regulate way individuals, groups and orgs relate and interact with one another]
The surrounding climate within which the innovation actors function
Institutional factors and incentives that influence the innovation process
36
Dimension 1: Innovation Actor
Government
Universities
Industry & Professional Association
s
Private Sector
Mainland & International
Institutes/ Entities
R&D Organizations
37
Understanding the ‘S&T Actors’ Map Arrow widths represent the intensity of the
linkages between various actors Circles’ varying sizes represent the relative
importance of various actors based on: Ability to formulate rules (lay down ‘rules of the
game’) for the S&T environment, and policy formulation
Amount of funding injected into the local S&T system
Provision of infrastructure support
38
Dimension 2: Resource Flow
Resources flow through HK’s IS through the actions of innovation actors
There are: Resource inputs Intermediate outputs Final outputs
INPUTS INTERMEDIATE OUTPUTS OUTPUTS
Human Resource FlowsKnowledge FlowsPossible HRR&D Conversion
Hong Kong-based ResourcesNon-Hong Kong ResourcesFunding Flows
Existing Knowledge/ Technological Capabilities
(Hong Kong)
Funding
Non-Hong Kong R&D Human Resources
Hong Kong R&D Human Resources
Existing Knowledge/ Technological Capabilities
(Non-Hong Kong)
New Knowledge/ Technological Capabilities
Human Resources Innovation Oriented R&D Human Resource Base
Firm Level Innovation Outcome
Hong Kong-Wide Economic Impact
39
Red boxes = human resources; Blue boxes = funding; Green boxes = knowledge/technical resources
40
Resource Flow: Inputs
Inputs Most important input: FUNDING
Public funding and Private funding Human resources
Locally produced and from overseas Organizations with knowledge and
technological capabilities Universities, private sector firms, R&D
orgs
41
Resource Flow: Outputs Intermediate Outputs
Human resources New Knowledge/Technological Capabilities
Outputs Human resources (HR)
HR forms a cycle; newly trained R&D specialists Firm level outcomes
Successful startups, new or improved products/processes, increased profits/sales, licensing royalties
42
Dimension 3: Innovation Environment
HK’s innovation system operates in an environment Environment influences innovation-
related incentives and initiatives
43
Innovation Environment
Policy and regulatory framework strongly influenced by policies of: Positive non-interventionism and free
trade Now: Small-government, big market
Environment serves to enhance influence of local + global competition